RAILROAD DEREGULATION, CARRIER BEHAVIOR, AND SHIPPER RESPONSE - A DISAGGREGATED ANALYSIS

The Staggers Rail Act of 1980 provided American railroads with almost complete relief from rate regulation. Regulatory reforms resulted in r apid and pronounced changes in firm behavior and an eventual reconfigu ration of the industry as a whole. This investigation provides a highl y disaggregated study of deregulated rail rates for seventeen commodit ies. The results indicate that the Staggers Act fundamentally altered the way in which rail carriers price their services. As importantly, t he results suggest that shippers have responded to altered railroad be havior by changing the characteristics of their shipments. Together, t he changes in railroad behavior and shipper responses to these variati ons have produced lower railroad rates for a small but measurable numb er of movements across a wide range of commodities.