Edit post

Edit your reply below.

Post Body
Enter your post below.
So Ken, you're in favor of reregulation of rates, rather than implementing intramodal competition combined with public/private support for infrastructure?   Let me explain something to you to put this and other such studies into perspective.  An econ study you get today is based on past econ studies, which themselves are based on further past econ studies that are responsible for constructing the template of analysis.  All our academic studies of the US rail system is based on over 100 years of studying an integrated private system.  All the terms used in analysis (aka "natural monopoly") is based on this integrated model.  Trying to construct a brand new template for the analysis of competitive access is subsequently difficult for these academics - they just can't seem to imagine a rail system where infrastructure operations are separated from transporter operations, such as we have with our highway and waterway transportation systems: 1.  The Ivaldi and McCollough study mentions the open access analogy to telecommunictions and utilties as being not apt, yet they make no similar comparative analogy to highways and waterways!  Hmmmmmmm....... 2.  This same study does mention the returns to density of an infrastructure owner as being the key to track owning profitability - with separation and subsequent transparency of cost accounting, you will find that profits are related to hosted volume.  "(Open) Access proponents might argue....that the newcomer's aggresive marketing would result in more economies of density."  It is suprising that these same economists do not take more time to study the relationship between integration and intra-operational market skewing, as dispatchers push for reduced maintenance windows while trackmen push for more maintenance windows.  I guess we'll leave it to more government regulation to force more track inspections via the FRA.... <A HREF="/trn/print.aspx?c=a&id=1004">http://www.trains.com/trn/print.aspx?c=a&id=1004</A> 3.  The Bitzan study (which we parsed a while back in another OA thread) builds it's case on the acceptance of his "natural monopoly" definition as being an inelestic definition, e.g you can't dissect a natural monopoly, ergo introducing competition does not jive with cost considerations.  Of course, he completely ignores the existence of multiple user rail lines in the US, and the ability of those firms to co-exist in a competitive market in seemingly good corporate health.  Evidence of multiple user lines would suggest that the inelastic natural monopoly is a false premise, and I would suggest that the natural monopoly exists soley due to government sanction rather than market naturalization.  Again, his study does not analyze track ownership cost in a transparent setting, prefering (as all these referenced economists) to accept the fuzzy accounting of the integrated firms. 4.  The grad-student thesis disguised as an economic study (Candell and Kalt) is much of the same, arguing that the separation of infrastructure from transporter operations would result in intra-firm manipulation, rather than taking the separation as a de facto splitting of the firm itself into separate entities.  The analogy of the factory building being forced to accept the production needs of a competitor (not explicitly referenced, but that's where it was heading anyway) is the most egregious error an economist could commit, since the infrastructure of the railroads is a utility function, not a plant production function.  This is where the transmission analogy is a better fit, with energy companies now hosting competitors' electric production over their private transmission lines, yet the electric production itself is still off limits to competitive intrusion. Again, Candell via Kalt ignores the existence of multiple user lines, arguing for integration as being more "promising" for rail access coordination.  Again, if current rail dispatchers can coordintate access with multiple transporters in trackage rights situations, et al, then the whole conclusion of Candell is blown away.  Someone might also point out to Candell that those negotiated contracts have fallen out of favor - so much for counteracting the inefficiencies that arise from price discrepency aka differential pricing aka monopoly pricing. (p 16) What?!?  One of these cited references actually admit that differential pricing is an "inefficiency"?  Well, yes and no - yes it's an inefficiency when the example is used in passing to buttress some other talking point, but somehow not when the topic is the focus of study.  Hmmmm....... The problem with all these studies is that very little attention is paid to the unintended consequences of the antiquated private integrated model for rail operations (aka, the contribution of the US integrated rail system to the US trade deficit via the differential pricing conundrum), and the queer dychotomy of railroad companies resisting "forced" access, yet accepting "forced" government regulation.  The clear failure of Staggers is that it is focussed on buttressing the financial situation of the railroad companies, not on what's best for the US transportation system.  US shippers want and deserve widespread rail access (even out here in the boondocks) and competitive rail rates, and you can't get that with the condensed integrated model.  What's best for the Big Six is not necessarily what's best for rail shippers' needs. BTW - anyone notice that Staggers has not appreciably improved the ratio of net available reinvestment funds to capital expenditure needs?  Well, what do you expect with a rail system anachronism that is the moral equivalent of Feudalism?
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag