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Against The Stand-Alone-Cost Test In U.S. Freight Rail Regulation, Russell W. Pittman
Against The Stand-Alone-Cost Test In U.S. Freight Rail Regulation, Russell W. Pittman
Russell W. Pittman
The stand-alone-cost test has become an expensive, extensive, and time-consuming part 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. Worse, a close examination of the history of its adoption and application suggests only a very tenuous connection with its claimed intellectual foundations, the classic works of Faulhaber (1975) and Baumol, Panzar, and Willig (1982). It is time to retire this tool and replace it with something simpler and more effective and transparent.
The Economics Of Railroad “Captive Shipper” Legislation, Russell W. Pittman
The Economics Of Railroad “Captive Shipper” Legislation, Russell W. Pittman
Russell W. Pittman
Recent rate increases by U.S. freight railroads have refocused attention on regulation, deregulation, and regulatory reforms in the railroad industry. Legislation introduced into Congress would render a variety of railroad behavior newly subject to the jurisdiction of the antitrust statutes, with potential enforcement by the Antitrust Division and the FTC and through lawsuits brought by state attorneys general or private parties. This paper considers the economic issues raised by legislation and the likely impacts on competition and welfare.