A NOTE ON RAILROAD-SHIPPER TRANSACTIONS: APPROPRIATION, PRIVATE CONTRACTS, AND REGULATION

This paper argues that railroads, without regulatory constraint, would tend to form long-term contracts for transportation services. In a short-term market the volatility of pricing would lead to substantial discounting by railroads of expected revenues. Volatility results from the large ratio of sunken costs to variable operating costs, indivisibility in providing incremental capacity, long-lived assets and the large segments of demand by large shippers. For many cases, contracts would be a more efficient transaction form than sale of services in a spot market. Also rate regulation by ICC may serve to increase efficiency. With private contracting service requirements can be specified and resources may be committed to increase efficiency in a way not possible under regulation.

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  • Corporate Authors:

    American Society of Traffic and Transportation

    547 West Jackson Boulevard
    Chicago, IL  USA  60606
  • Authors:
    • Houston, D A
  • Publication Date: 1979

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Filing Info

  • Accession Number: 00311002
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jun 9 1980 12:00AM