ECONOMICS OF ELECTRIFICATION

Economics serves to allocate scarce resources and the pricing system serves to drive the energy of economics. In the railroads' weighing of two options, electrification or continuation of diesel operation, the author introduces what he terms the Corporate Hurdle Rate, a return sufficiently above the weighted incremental cost of capital so that new investments at this level will overcome the low earnings of present sunk investments. He notes that the economics of two options should be analyzed and if there is an acceptable option, then the cheapest source of financing should be secured. Introduced also is the technological risk factor. Finally the author speculates on whether the only choices should be diesel or electric operation.

  • Availability:
  • Supplemental Notes:
    • Proceedings of the conference held at the University of Wisconsin, May 6-8, 1974, sponsored by the Federal Railroad Administration and the Wisconsin Department of Transportation contained in "The Role of U.S. Railroads in Meeting the Nation's Energy Requirements."
  • Corporate Authors:

    University of Wisconsin, Madison

    Graduate School of Business
    Madison, WI  United States  53706
  • Authors:
    • Michon, A E
  • Publication Date: 1974-10

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 00072575
  • Record Type: Publication
  • Source Agency: Federal Railroad Administration
  • Report/Paper Numbers: Proc Paper
  • Files: TRIS, USDOT
  • Created Date: Dec 31 1976 12:00AM