Density and integration effects on class IUS freight railroads

We investigate some technological aspects of railroading relevant to the de bate on open access by estimating a multiproduct cost function with both op erational outputs and infrastructure maintenance outputs. We find strong co st complementarities among operational outputs, but not between operations and infrastructure. The latter result implies that at the levels of output that characterize freight rail operations in the U.S. there may be no inher ent technological advantages from vertical integration. The former suggests though (for reasons that we develop below) that competitive access alone w ill not necessarily lead to competitive outcomes in rail freight markets.