ECONOMIC FACTORS INFLUENCING THE DECISION TO USE JUMBO RAIL CARS

For over 40 years engineers have concluded that very heavy axle loading lends to a disportionate degree of track wear. Economists see the important question being why management continues to purchase and use jumbo cars in the face of very pervasive evidence provided by engineers. Management lives in a world of demand functions, cost functions, accounting principles and regulation. Decision making in this maze of variables, constraints and uncertainties must be made on the basis of the best information at its disposal and given the nature of railroading. ICC costing and regulatory restraints have encouraged large cars. Economics of scale seem to justify large cars. Long term economic costs, including those associated with track deterioration, may paradoxically be the wrong basis for rate making. Inability to compete in the short run may make the long run irrelevant. Short run profit maximization may be maximum use of assets.

Media Info

  • Pagination: p. 130-132

Subject/Index Terms

Filing Info

  • Accession Number: 00132973
  • Record Type: Publication
  • Source Agency: Federal Railroad Administration
  • Report/Paper Numbers: FRA OR&D 76-243
  • Files: TRIS, USDOT
  • Created Date: Jun 5 1976 12:00AM