Changes in railroad rates since the Staggers Act

The railroad industry was substantially deregulated by the Staggers Act in 1980. While railroad rates, as measured by industry-wide revenue per ton-mi le, declined since that time, it is unclear why rates declined. Changes in commodity mix, length of haul, shipment size, lading weight, equipment owne rship, railroad costs, competition from other modes, and demand for railroa d transportation have all played some role. This paper assesses the importa nce of each of these factors in explaining the decline in railroad rates si nce the Staggers Act. After controlling for changes in commodity mix, the a nalysis indicates that shippers received nearly $28 billion per year in rat e reductions as a result of changes that took place between 1982 and 1996. The reduction in productivity-adjusted railroad costs explains almost 90% o f the reduction in railroad rates, with other factors playing much lesser r oles. (C) 2000 Elsevier Science Ltd. All rights reserved.