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Cost Savings and Productivity in the Railroad Industry

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Abstract

Railroad deregulation has had tremendous effects on the level of costs and productivity gains. I use an unbalanced panel of railroads from 1978 through 1989 to estimate a translog cost function. I find that initially cost savings from partial deregulation were modest. However, by 1989, I find that cost savings were tremendous, with costs being up to 40 percent lower than they would have been under regulation. I also find that while initial effects of deregulation on productivity gains were large, these effects have fallen through time, and currently are comparable to pre-deregulation levels.

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  1. Wesley W. Wilson
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Wilson, W.W. Cost Savings and Productivity in the Railroad Industry. Journal of Regulatory Economics 11, 21–40 (1997). https://doi.org/10.1023/A:1007946111577

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