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[quote user="jeaton"][quote user="futuremodal"][quote user="jeaton"][quote user="futuremodal"] You and Jay should get together and contrive a response to this little factiod:  Why do transportation economists refer to railroads as "natural monopolies" if indeed any available mode should be counted as *competition*?  If, as you both contend, trucks are competition for railroads (and since trucks are everywhere), why do these economists seemingly ignore the nationwide saturation of trucks in defining railroads as monopolies? [/quote] Here is a little "factoid" for you. "Natural monopoly: A market that has high natural barriers to entry (usually because of increasing returns to scale) is referred to as a natural monopoly because such a market has a tendency to become a monopoly. Indeed, in the presence of increasing returns to scale, a market that consists of a single large producer is the most economically efficient." Answer to your question:  Maybe there are conditions where a railroad may meet the defination of a "natural monopoly".  I don't see anything that says a natural monopoly always exist when only one railroad serves a shipper. Note the first underlined phrase.  A market being called a "natural monopoly" is called that because condition exist that can lead to a monopoly AND NOT because it is a monopoly. The key part of the defination "A market that has high natural barriers to entry" is a natural monopoly.  So if it only takes a truck to get into a market, obviously that market does not have a high natural barrier to entry and is not a natural monopoly. Your view that competition in the transportation can only exist on an intramodal basis presumes that for the movement of frieght there are "railroad markets", "truck markets", "pipeline markets", "barge markets", etc.  Is there a divine decree that makes this so? People who are in charge of getting a shipper's freight moved from point to another are going to select the mode or method that gets the needed level of service at the lowest cost.  For the right price and availability, alien spacecraft can work. Thought the last sentence in the defination was rather interesting. [/quote] You are right, and yet so wrong, and it's because you cannot separate the track from the rolling stock in your mind's definition.  Railroads are only restricted in entry because of the physical constraints of laying tracks.  That same entry restriction is not contingent upon the rolling stock.  Thus, when you separate infrastructure from transporter operations (e.g. the implementation of open access, e.g. busting the integration), the axiom of efficiency due to high natural barriers no longer applies to the transporter segment.  In this case, the infrastructure owner retains the natural monopoly, but the transporter no longer is afforded that same monopoly, aka intramodal competition is introduced.    That's why busting the integration model embodies the introduction of more economic efficiencies, since the ever present societal need to regulate the monopoly (something that is now hard-wired in our Western version of free market capitalism) is reduced to regulating the infrastructural aspects (aka the utility aspect of railroading), rather than regulating the entire genre from head to toe as was done pre-Staggers. [/quote] I can very well separate the track from the rolling stock.  [/quote] Prove it.  You have shown no ability whatsoever to do just that, as you continue to use economic anachronisms that all lump railroad analysis into the integrated model.  I'll say it one more time - the "natural monopoly" of railroads and the subsequent barriers to entry lies with the infrastructure.  It is in no way, shape, or form embodied in transporter services, other than the fact that we've forced a shotgun marriage of infrastructure and transporter services.  When we regulated railroads pre-Staggers, it was the whole shebang, and that was the problem with regulation - it brought economic inefficiencies to the transporter services sector, e.g. on the supply side.  When we partially deregulated the railroads post-Staggers, it was basically the same deal in reverse - now the transporter services are deregulated as they should be, but the natural monopoly was also deregulated, which predictably brought on the subsequent economic inefficiencies (aka monopolistic rate abuses) we have today, e.g. on the demand side. [quote] I and many others have already gone over this. Open access may reduce rates for some shippers, but it is never going to be the utopia of your dreams.  That is the point of Gallamore's paper, which you have chosen to simply dismiss with the argument  "their wrong".  However, so long as you define economic efficiency with reduced rates or prices, I guess the arguements will be somewhat beyond you. [/quote] I didn't say "they're wrong", I said they are using the established but anachronistic economic analysis structure based on integration dating back 150 years.  Gallamore et al make no attempt to prescribe an analysis of cost recovery of infrastructure via usage, something that would be light years more useful as an economic tool for analysis than what they are building on now, and something that would be quite easy to assess right now even with the integrated model for making a more intellegent determination of the effects of an open access policy. You should note, there is at least one such model that I know of - TrackShare from ZetaTech.  (Yes, I've posted this before, but here it is again for posterity's sake) - <A href="http://www.zetatech.com/CORPQIII44.htm">http://www.zetatech.com/CORPQIII44.htm</A> Every so-called transportation economist (Gallamore, Bitzen, et al) purporting to have an "unbiased" analysis of the effects of open access on the US rail system should be forced to use this cutting edge tool in all their railroad studies.  Of course, if they did, they'd have their 150 year body of work completely blown up, and if we've learned anything from the global warming hyperboholics, they do not take kindly to being shown up by newer more relavent data.
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