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Against the stand-alone-cost test in U.S. freight rail regulation

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Abstract

The stand-alone-cost test has become an expensive, extensive, and time-consuming component of the regulatory practice of the U.S. Surface Transportation Board in the performance of its statutory duty to protect “captive shippers” from monopoly rail rates. A close examination of the history of its adoption and application suggests only a tenuous connection with its claimed intellectual foundations. It is time to retire this notion and replace it with something simpler and more effective and transparent.

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Authors and Affiliations

  1. Economic Analysis Group, Antitrust Division, U.S. Department of Justice, Washington, DC, USA

    Russell Pittman

  2. New Economic School, Moscow, Russia

    Russell Pittman

Authors
  1. Russell Pittman
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Correspondence to Russell Pittman.

Additional information

The author is grateful for comments on an earlier version by Darryl Biggar, Nat Clarke, Gerald Faulhaber, John Fonte, Bill Huneke, Dick Klem, Henry Posner III, Lou Thompson, Jack Ventura, Nick Wills-Johnson, and the editor and two anonymous referees, and for excellent research assistance from Michael Carley. The Antitrust Division encourages independent research by its economists; the views expressed herein are entirely those of the author and are not purported to reflect those of the U.S. Department of Justice.

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Pittman, R. Against the stand-alone-cost test in U.S. freight rail regulation. J Regul Econ 38, 313–326 (2010). https://doi.org/10.1007/s11149-010-9130-3

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  • DOI: https://doi.org/10.1007/s11149-010-9130-3

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