An empirical test of modal choice and allocative efficiency: Evidence from US coal transportation

A generalized shipper transportation cost function is estimated to test whether coal shippers achieve allocative efficiency with respect to market prices when facing limited access to the full range of transportation services. Findings indicate that allocative efficiency with respect to market prices is achieved when shippers have access to all major transportation modes. In contrast, the condition for allocative efficiency is not met with respect to market prices when shippers' modal choices are limited to trucking and rail services. Findings for the sample of shippers who face limited shipping choices is interpreted as suggesting an over-use of trucks relative to the use of trains due to price distortions of transportation services.

[1]  J. Sauer,et al.  DISTORTED PRICES AND PRODUCER EFFICIENCY - ROMANIAN MAIZE , 2006 .

[2]  W. Bruce Allen,et al.  The Economic Effects of Surface Freight Deregulation , 1990 .

[3]  H. Uzawa,et al.  Production Functions with Constant Elasticities of Substitution , 1962 .

[4]  John Bitzan,et al.  The structure of railroad costs and the benefits/costs of mergers , 1999 .

[5]  Tae Hoon Oum,et al.  A SURVEY OF PRODUCTIVITY AND EFFICIENCY MEASUREMENT IN RAIL TRANSPORT , 1999 .

[6]  T. Harris,et al.  Industrial Restructuring and the United States Coal-Energy System, 1972–1990: Regulatory Change, Technological Fixes, and Corporate Control , 1996 .

[7]  John Bitzan,et al.  Productivity Growth and Some of Its Determinants in the Deregulated U.S. Railroad Industry , 2003 .

[8]  T. Oum.  A CROSS SECTIONAL STUDY OF FREIGHT TRANSPORT DEMAND AND RAIL-TRUCK COMPETITION IN CANADA , 1979 .

[9]  Clifford Winston,et al.  U.S. Industry Adjustment to Economic Deregulation , 1998 .

[10]  Theodore E. Keeler,et al.  Pricing in a Deregulated Environment: The Motor Carrier Experience , 1991 .

[11]  Moshe Kim,et al.  Scale Economies in Banking: A Methodological Note , 1985 .

[12]  Thomas J. Kniesner,et al.  Estimating a Non-minimum Cost Function for Hospitals* , 1988 .

[13]  L. Weiss,et al.  Regulatory reform : what actually happened , 1986 .

[14]  C. Winston,et al.  Potential Benefits of Rail Mergers: An Econometric Analysis of Network Effects on Service Quality , 1983 .

[15]  Tae Hoon Oum,et al.  Competition and Allocative Efficiency: The Case of the U.S. Telephone Industry , 1995 .

[16]  José A. Gómez-Ibáñez,et al.  The Success of the Staggers Rail Act of 1980 , 2005 .

[17]  A. Friedlaender,et al.  The dilemma of freight transport regulation , 1969 .

[18]  Michael B. Morrison.  Transportation of US western coal: The impact of deregulation on unit train rates☆ , 1985 .

[19]  E. Berndt,et al.  Mergers, Deregulation and Cost Savings in the U.S. Rail Industry , 1991 .

[20]  T. G. Moore.  RAIL AND TRUCKING DEREGULATION , 1986 .

[21]  Scott E. Atkinson,et al.  PARAMETRIC EFFICIENCY TESTS, ECONOMIES OF SCALE, AND INPUT DEMAND IN U. S. ELECTRIC POWER GENERATION* , 1984 .

[22]  James R. Blaze,et al.  Short-Haul Rail Intermodal: Can It Compete with Trucks? , 2004 .

[23]  Patricia A. Buckley,et al.  Market definition and assessing the competitive relationship between rail and truck transportation , 1991 .

[24]  James M. MacDonald,et al.  Railroad Deregulation: Pricing Reforms, Shipper Responses, and the Effects on Labor , 1996 .

[25]  Robert W. Harbeson,et al.  Toward Better Resource Allocation in Transport , 1969, The Journal of Law and Economics.

[26]  J. Bitzan.  Railroad Cost Considerations and the Benefits/Costs of Mergers , 1997 .

[27]  FREIGHT RAILROADS.  FREIGHT RAILROADS Industry Health Has Improved , but Concerns about Competition and Capacity Should Be Addressed , 2006 .

[28]  C G Bereskin.  SEQUENTIAL ESTIMATION OF RAILROAD COSTS FOR SPECIFIC TRAFFIC , 2001 .

[29]  W. Wilson,et al.  Cost Savings and Productivity in the Railroad Industry , 1997 .

[30]  John S. Ying.  The Inefficiency of Regulating a Competitive Industry: Productivity Gains in Trucking Following Reform , 1990 .