greyhounds wrote: futuremodal wrote: I did not say the refinery won't ship some product by truck, or pipeline, or barge. Yes you did. Here's exactly what you said: futuremodal wrote: Barges are limited to waterways, so anything bound for non-waterway locales must go by rail or pipeline. To you it's barge, pipe or rail. You totally left out trucks
futuremodal wrote: I did not say the refinery won't ship some product by truck, or pipeline, or barge.
I did not say the refinery won't ship some product by truck, or pipeline, or barge.
Yes you did. Here's exactly what you said:
futuremodal wrote: Barges are limited to waterways, so anything bound for non-waterway locales must go by rail or pipeline.
Barges are limited to waterways, so anything bound for non-waterway locales must go by rail or pipeline.
To you it's barge, pipe or rail. You totally left out trucks
Well la de da. For what it's worth, trucks were infered, if not actually mentioned that one time. I guess from now on we have to type all available modes, or someone has an out of context hissy fit.
futuremodal wrote: 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? You really don't understand that trucking companies and railroads compete for freight?
futuremodal wrote: 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?
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?
You really don't understand that trucking companies and railroads compete for freight?
You really don't understand product differentiation, do you? To you it's all homogenous, and therein lies the error of your ways.
Try to understand the definition of "Natural Monopoly" that Jay posted. It's got nothing to do with your concept of what a monopoly is. It doesn't mean that the customer has only the one transportation producing firm to buy from, or that he can't shift freight between modes.
It means what it says, that a railroad is a monopoly for what it hauls best, e.g. that "efficiency" reference. Again, product differentiation, Ken.
It means that the low cost method of handling railcar freight to and from facilities such as the ExxonMobile refinery generally involves only one rail firm. Introducing a second rail carrier into the situation would increase the cost of rail service to the plant. This cost increase would shift freight from rail to other modes, such as trucks. Bad idea Dave.
Bad conclusion, Ken. There is nothing implicit about a second rail carrier "increasing costs" to serve the plant. There would be a shift of revenues from the one rail carrier to the new rail carrier, assuming they both use the same trackage. Loss of revenue does not equate to increasing costs.
What might happen with rail on rail competition is a shift in the plant's production to products more prone to rail carriage if they are now afforded more reasonable rates and rail service offerings.
On the simplest of levels, instead of sending in one crew to switch out the plant, you'd now have two crews. (who would probably get in each other's way and P/O each other even if they didn't by the way each left things for the other.) So unless the volume doubled, which it couldn't do unless there was a modal shift (and you falsely maintain there is no modal competition), each crew switching the plant would handle fewer cars (maybe by as much as half) than the one crew would.
Another faulty premise. Who says the plant or a 3rd party contractor can't handle the switching for both carriers? All the Class I's have to do is leave the inbounds and take out the outbounds. You know, like Ed's railroad.
This will increase the per unit and overall rail cost of switching the facility. Increasing the rail cost and diverting freight to truck movement is no way to go through life Dave. (Other rail cost will also go up with the introduction of a second serving railroad.)
See above....
The low cost method of providing railcar service to the facility is through one single railroad firm. That's what they mean by "Natural Monopoly".
That definition assumes no multiple track users. Another faulty assumption by monopoly apologists.
futuremodal wrote: It means what it says, that a railroad is a monopoly for what it hauls best
It means what it says, that a railroad is a monopoly for what it hauls best
And a truck is a monopoly for what it hauls best?......and a pipeline?.....and a barge?........and an alen spacecraft?....... I think you just took another trip to the definition outlet mall. Just because a definition is on sale, doesn't mean it's a good one.
Thanks to Chris / CopCarSS for my avatar.
Let me see if I understand this right....well, the "captive shipper" part of it.
Let us just say, that there is an industry, with a spur or two to serve it off of a main rail line, the only rail line through the area. (For fun, let's make it a Class 1) Now, let us imagine that this company makes a product that is so large, heavy, or bulky, that it can only go by flat car. But, some components can go by truck, but not the main product itself. So, does this make the company a "captive shipper"... after all, trucks can handle some of freight, but not all of it... and certainly not the main product, made by this company.
Now, to further muddy the question.... Let us say, that about 200 yards to the north of this facility, a regional line services another industry, and there is a spur off of the regional, to the other business. Now, lets say this manufacturer of the bulky, by-flatcar-shippable-only product, wants a better freight rate, and proposes, expanding the regional line's spur to his factory. ( for simplification purposes, let's assume the regional line's spur, and manufacturer's spur can be connected with very little fuss, ) so, perhaps he can negotiate a better freight rate, with either the regional, or the Class 1. Also, regional does have connections to a Class 1, and that Class 1 also goes to the same cities as the railroad that ships for the manufacturer.... Some questions.
Who pays for the extension of the spur? The manufacturer, or the regional, or do they split the cost?
Who pays for the maintenance of the spur?
Also, even though there would be "competition" if the regional was allowed to connect, is not this shipper still "captive"? Even though he would have the possibility of another railroad servicing his plant? After all, he can only ship his product by rail, trucks can handle only a small percentage of "accessories" for lack of a better word, that go with this main product. What if, the regional charged him less, but not by much. For argument's sake, let's say the Class 1 is charging this company at 260% R/VC, and the regional comes in at 255% R/VC (don't know if those are realistic numbers, but try to follow me here), and since he would be sending his wares via, another railroad (regional to Class 1 connection) would the shipping rates be higher? OR, would the Manufacturer, using his other connection as leverage, beable to negotiate a lower rate with the Regional, and the Class 1, OR, would the rate be higher, because the cars would have to be dropped by the regional and then picked up by the other Class 1? (Also, for argument's sake, this shipper sends a regular amount of cars out a week) Since, this shipper can only ship by rail, is he not still captive, even though truck can handle "some" of his other products, and there is the potential for competition from another railroad? Just thought I would throw this out there.
(The reason behind this: I was coming home last night from a wake, and I noticed a train on the BNSF, there were 3 flat cars with rather large loads (some kind of large storage tank) , and that got me to thinking)
Tim,
Yes and no…for the most part no.
The idea that a company might design something, lets say a catalytic cracking unit, and only then, once the unit is built, go looking for a way to transport it doesn’t work.
Most of the “large” or oversized items you see transported by rail are specifically designed for this type of transportation system.
See the photo below, where the refinery tower was designed to be moved in this manner…the pivot points for the attachment to the flats is an integral part of the tower…not a add on as you go item.
See the Schnabel car and the SunCo. refinery tower shown.
Again, the attachment points, and the overall design incorporate the concept that it will move only by rail.
Does this make the shipper captive?
No, if they choose to, they could design and build these items to specifications that would allow them to travel in sections on trucks, and do the final assembly on site.
But the refinery may not have the capability to do the final assembly, or the owner may not want the added expense of shipping several different parts and then re-assembling them on site.
If you are in the business of making such items, then the shipping cost and system is part of your products overall design, and becomes part of your final bid on the contract…so it is a choice the builder makes, not an elimination of options.
In your hypothetical situation, the builder does have options.
If his product can only be shipped complete, and is so large it has to move by rail, one of the options is to locate the plant near competing rail lines.
If you in the business of making things of this nature, then plant site/fabrication location is a high consideration, one that dictates where you locate you facility in the first place.
You don’t find places that build things like this in the middle of Montana wheat country.
But you do find them in heavily industrialized places like Houston, Detroit, Pittsburg…you get the idea…
Were either of the shippers in these photos captive?
No, both items arrived via ship, and the owners could have docked in Louisiana, or Mississippi, and shipped via CSX or NS if they chose to.
Your looking at two modes of transportation, ship and rail…there was a third option, they could have loaded either item onto a barge, and sent it via the Intracostal water way, up the Mississippi, and then via rail to the final destination, so you have three modes to decide on.
But for the shipper’s purpose, and the final cost, it was cheaper to dock in Houston, and send the completed items via BNSF to their final destinations…an economic choice, not a physical constraint.
As for building a additional spur to a competing railroad, as you suggested, unless your shipping volume justifies it, the other railroad will most likely require you to build the spur out of your pocket…and require you to build to their specifications.
Once that is done, then you might find you have built yourself into a corner, so to speak.
In that, again, unless you ship such a large volume as to attract a competitive pricing from either railroad, you might find them both deciding your business isn’t worth the bother.
After all, if you ship only one of these items every six months, then the railroads might decide that the cost of moving your product doesn’t generate enough profit for them, and they will price their service to reflect that.
Your shipping cost might increase.
The idea that both of the railroads will compete, and low bid each other to get your business works only if you ship enough volume to justify it to the carrier.
On the other hand, if you have only one carrier to deal with, the odds are they will want your business, because they “run there” already, and they will offer a price you can live with.
Part of the natural monopoly explored further up in this thread.
23 17 46 11
Okay, Ed... thanks. I posted that because I am just trying to understand all of this. I suppose my post was not thought out all of the way, but the main question was answered. I think I understand things better at this point.
Murphy Siding wrote: futuremodal wrote: It means what it says, that a railroad is a monopoly for what it hauls best And a truck is a monopoly for what it hauls best?......and a pipeline?.....and a barge?........and an alen spacecraft?....... I think you just took another trip to the definition outlet mall. Just because a definition is on sale, doesn't mean it's a good one.
Horshack, go write 100 times on the blackboard "Trucks and barges have intramodal competition" so you can remember what we've already studied last year. When you've done that, you can return to the discussion.
TimChgo9 wrote: Let me see if I understand this right....well, the "captive shipper" part of it. Let us just say, that there is an industry, with a spur or two to serve it off of a main rail line, the only rail line through the area. (For fun, let's make it a Class 1) Now, let us imagine that this company makes a product that is so large, heavy, or bulky, that it can only go by flat car. But, some components can go by truck, but not the main product itself. So, does this make the company a "captive shipper"... after all, trucks can handle some of freight, but not all of it... and certainly not the main product, made by this company.
You are exactly right, Ed's counter example notwithstanding. In Ed's synopsis, the load in question is inbound from a port. As I explained a while back, there are no captive sea-to-dock importers. Any product that is brought to port by ship usually has a choice of ports, and that slate of ports (at least the larger ones) also offers usually at least two Class I connections.
Now, take Ed's example and reverse the shipping direction. Say it's a factory in Indiana with only one Class I connection that makes these components, and they need to ship one overseas. In spite of the fact that they can play one port against the other and one shipping line against the other, they cannot hedge that initial transportation cost out of the plant. And that's where they lose out to foreign competitors who suffer no similar captive rate offering.
And of course, saying that "it's their fault for locating the plant on a single Class I rail line" is rather disingenuous, since most such factories were sited pre-Staggers under regulated mileage based rates. Who in their right mind could have foreseen that their so-called representative government would suddenly enslave them to a government sanctioned monopoly via Staggers?
jeaton wrote: futuremodal wrote: 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? 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.
futuremodal wrote: 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?
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?
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.
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.
futuremodal wrote: Murphy Siding wrote: futuremodal wrote: It means what it says, that a railroad is a monopoly for what it hauls best And a truck is a monopoly for what it hauls best?......and a pipeline?.....and a barge?........and an alen spacecraft?....... I think you just took another trip to the definition outlet mall. Just because a definition is on sale, doesn't mean it's a good one. Horshack, go write 100 times on the blackboard "Trucks and barges have intramodal competition" so you can remember what we've already studied last year. When you've done that, you can return to the discussion.
FM Nice diversion of the point. You are saying that there are certain things that a mode "does best" and if there is only a single carrier of that mode in a particular market, then there is a monopoly. Your notion that there is no competition between modes is really dumb and as long as you persist with the idea that freight is "inherently" truck freight or rail freight or pipeline freight or whatever, I guess you are going to be stuck in dumb.
"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics
jeaton wrote: futuremodal wrote: Murphy Siding wrote: futuremodal wrote: It means what it says, that a railroad is a monopoly for what it hauls best And a truck is a monopoly for what it hauls best?......and a pipeline?.....and a barge?........and an alen spacecraft?....... I think you just took another trip to the definition outlet mall. Just because a definition is on sale, doesn't mean it's a good one. Horshack, go write 100 times on the blackboard "Trucks and barges have intramodal competition" so you can remember what we've already studied last year. When you've done that, you can return to the discussion. FM Nice diversion of the point. You are saying that there are certain things that a mode "does best" and if there is only a single carrier of that mode in a particular market, then there is a monopoly. Your notion that there is no competition between modes is really dumb and as long as you persist with the idea that freight is "inherently" truck freight or rail freight or pipeline freight or whatever, I guess you are going to be stuck in dumb.
jeaton: It's all in the definitions my friend.
futuremodal wrote: jeaton wrote: futuremodal wrote: 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? 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. 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.
I can very well separate the track from the rolling stock. 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.
Data,
I agree, you are correct in stating that wheat grows in selected places, un like a manufacturing facility, wheat production is limited geographically.
But the business of farming is evolving, based in no small part on better methods, both in the ag business and in the transportation business.
What I was getting at is the forced evolution of one business by the evolution of another business, or a component of that business, in this case, the evolution of railroading from an artificially priced “public” utility into a competitive, market driven business, which is forcing its customers, in this case, Montana wheat growers, to follow suit.
What that leaves us is the choice between a government controlled economic situation, and a market driven one.
Sure, back in the day the Montana guys had a choice between GN and NP, but the rates both charged were artificial in the first place.
The only real difference was routing…which, depending on the carrier, could be efficient, or not.
One look at the worlds most controlled economy, the Soviet Union, should point out the major flaws in that…
Efficient production there was not really required, because it really didn’t matter if you produce the product for less or were efficient, you still got the same return regardless.
That system collapsed under its own bureaucratic weight.
The rail industry pre Staggers suffered the same problem; its bureaucratic requirements and government controlled rates were killing it.
Yes, mergers did limit the name on the side of the locomotive, but in the end, it is still a train.
Yes, routes that failed to generate enough “profit” to encourage BNSF to continue service have been, and will continue to be abandoned or closed.
Business sense dictates that, as do shareholders meetings.
Which leaves the growers in a quandary…either find a way to get the crop to a point where BNSF will serve, create an alternative mode of transportation, and therefore charge more for their product to cover the additional transportation cost, or somehow entice the railroad to provide service to their area, and lastly build/buy their own railroad.
In reality, they do have service…BNSF will haul all the unit grain trains you offer them…it is building the unit trains that causes the growers a problem.
What has happened is that the growers allowed themselves to get trapped into the “business as usual” routine, short hauling their product to all the Mom and Pop elevators…places where the railroads were forced to provide service whether it made them money or not…no skin off the farmers nose, he could care less if it was “fair” to the railroads, right?
Well, now the Montana growers are being forced to compete with the growers who are closer to mega elevators…a market driven economy will force them to either adapt or close.
If they close, bet your bottom dollar that companies like ADM will move in, and because of the economy of scale, be able to build the type of elevators BNSF will haul from, those who can load out 120 car unit trains as fast as BNSF can deliver the empties.
Trust me, they will not stop growing wheat in Montana…but who is growing the wheat most likely will change, from the family farm, with all the inefficiencies a small business has inherent in its operation, into mega growers…Super Ags if you will, that can and do exert enough economic clout that they can entice a railroad to possibly build new tracks and or open closed lines.
They will build mega elevators in strategic locations, and develop a system to transport the wheat to these elevators, as long as it is economically profitably for them to do so.
Fact is we currently grow enough wheat to satisfy our domestic needs, and have a large enough surplus to export an amount that feeds quite a few other countries.
Imagine the domestic consumer cost if those who grow wheat become even more efficient?
Of course, you do run the risk of becoming so efficient you end up with a product that has little or such a small value it becomes worthless.
Elimination of the small family farm…is this good or bad?
Depends if you are the family who owns the farm or not…but in reality, most of us don’t own farms, and could care less if ADM or Mom and Pop grow the wheat, so long as the cost to us in the supermarket remains constant.
Every industry has gone through this process…look at domestic automobile production…50 years ago, you had over a dozen domestic builders, remember Nash, Studebaker, Hudson, those guys?
Yet today, the three left standing, Ford, Chrysler and GM are in a crunch because they failed to adapt to a market driven economy.
Consumers wanted four wheel disc brakes, decent gas mileage, CD players and a little flair…the Big Three gave us boxes on wheels with such poor quality they devalued almost the instant they were sold to the consumer.
Enter companies who did offer the consumer what they wanted, at a price the consumer was willing to pay, and guess who now owns Chrysler?
Well, the wheat growers in Montana are in the same situation, adapt their methods, or fail.
It is not that the growers do not have alternatives; it is that the alternatives require a change in their methods of production and transportation, which they are naturally trying to avoid.
Coal is an excellent example here.
Used to be every holler and valley east of the big muddy had a coal mine, black lung was a Kentucky plague…and the majority of these mines moved their product via rail.
All the small mines are pretty much gone in favor of the mega producers, with Powder river Basin as a good example.
Why spend the money gathering up and moving small car loadings of coal from hundreds of mines all over the place when you can haul twice the volume out of a single location at less cost?
Very generalized of course, but you see the point.
Back to wheat, is this process “fair” to the Montana wheat growers?
Again, depends if you own a farm there…but if they succeed, you will see the cost of a loaf of bread increase, and that you will care about.
Because one of the “truisms” of business is that, in the end, the consumer will pick up any additional cost in the production process, be it a loaf of bread, or a new Chevy, when the industries involved pass along the additional cost to you through higher initial production cost and higher transportation cost, which you end up paying for.
Datafever: Not to discourage discussion on this thread, but....There is an extensive thread from back a ways, all about open acccess. It would give you the background of the idea, and of the views and personality conflicts on this forum involving discussion of open access.
http://www.trains.com/trccs/forums/534818/ShowPost.aspx
Murphy Siding wrote: Datafever: Not to discourage discussion on this thread, but....There is an extensive thread from back a ways, all about open acccess. It would give you the background of the idea, and of the views and personality conflicts on this forum involving discussion of open access. http://www.trains.com/trccs/forums/534818/ShowPost.aspx
Datafever wrote: Murphy Siding wrote: Datafever: Not to discourage discussion on this thread, but....There is an extensive thread from back a ways, all about open acccess. It would give you the background of the idea, and of the views and personality conflicts on this forum involving discussion of open access. http://www.trains.com/trccs/forums/534818/ShowPost.aspx Thanks for the pointer. I have begun reading through it, but I am only on page three and already I have more questions. Maybe some will get answered.What's your take? Is it preferable to begin a new thread, or is it better to resurrect an old thread?
Either/Or. The old thread will give you some background on the discussion. It's kind of like having a better understanding of a movie sequel, if you've seen the original movie first.
One good thing that did come out of that thread, is that it sort of spawned the British Railways thread that I enjoy. It has a fair discussion at the beginning about open access in Britain:http://www.trains.com/trccs/forums/531254/ShowPost.aspx
Jay,
If the best you can do is flame, then that shows you have no understanding of the issues. I'll tell you one more time - it's product differentiation. Until you can show me that you at least grasp an elementary understanding of how product differentiation dictates modal preferences, please keep your typical liberal insult barrage to yourself.
jeaton wrote: futuremodal wrote: jeaton wrote: futuremodal wrote: 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? 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. 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. I can very well separate the track from the rolling stock.
I can very well separate the track from the rolling stock.
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.
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.
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) -
http://www.zetatech.com/CORPQIII44.htm
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.
Zeta-Tech has developed a very nice program to quite accurately calculate variable track expenses based on real world conditions. That is something any track owner would want to know before moving a new train (of any ownership) over a segment of track. I agree that would be an essential tool for any open access program.
The link to their release includes the following statement.
"TRACKSHARE is applied only to those components directly affected by the passage of trains (rail, ties, and ballast). These variable expenses typically comprise about one half of total permanent way maintenance costs. The remaining 50% of track maintenance costs do not vary directly with traffic." (Italics mine)
If the only railroad trackage between point A and point B is of one ownership, a natural monopoly still exists and that condition will still drive the pricing for the use of those rails. Of course, that part alone can be subject to regulation. History shows that government regulation doesn't do a very good job of getting to economic efficiency. Futuremodal suggest that since railroad infrastructure is just a small part of the fully integrated railroad industry, the problem is simplified. With half the maintenance cost fixed, and the other unallocable cost for manageing the business, it is hard to claim that Trackshare will solve the pricing problem or that any regulation established to control pricing will actually make everybody happy.
futuremodal wrote: jeaton wrote: futuremodal wrote: Murphy Siding wrote: futuremodal wrote: It means what it says, that a railroad is a monopoly for what it hauls best And a truck is a monopoly for what it hauls best?......and a pipeline?.....and a barge?........and an alen spacecraft?....... I think you just took another trip to the definition outlet mall. Just because a definition is on sale, doesn't mean it's a good one. Horshack, go write 100 times on the blackboard "Trucks and barges have intramodal competition" so you can remember what we've already studied last year. When you've done that, you can return to the discussion. FM Nice diversion of the point. You are saying that there are certain things that a mode "does best" and if there is only a single carrier of that mode in a particular market, then there is a monopoly. Your notion that there is no competition between modes is really dumb and as long as you persist with the idea that freight is "inherently" truck freight or rail freight or pipeline freight or whatever, I guess you are going to be stuck in dumb. Jay, If the best you can do is flame, then that shows you have no understanding of the issues. I'll tell you one more time - it's product differentiation. Until you can show me that you at least grasp an elementary understanding of how product differentiation dictates modal preferences, please keep your typical liberal insult barrage to yourself.
I was trying to think of a product that can't be loaded and hauled in at least two modes. Maybe you can specify a product characteristic that allows movement by only one mode. If you are going to tell me that the volume of product shipped is a relavant differentation that dictates a modal preference don't you suppose that may be just because of cost differences? Trucks can haul coal, but railroads usually get the higher volume because they have lower costs and can set a lower price for the hauls.
futuremodal wrote: 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. .
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. .
Emphasis added by me.
I find it hard to believe FM actually said this. I don't find it impossible to believe he said this, but it's so totalitarian and it so flies in the face of thought that it's hard to believe that anyone raised in an open society such as the US of A would say that some academics should be forced to think in any specific way.
Zeta Tech is basically Randy Reesor. I went to grad school with Randy. He's a decent guy and he knows his stuff. But he's not the Alpha and Omega of thought. And he doesn't have the credentials or experience of Bob Gallamore.
For FM to say that Gallamore should be forced to think in terms that Zeta Tech (Reesor) lays down is an insane travisty. As is "Open Access".
Murphy Siding wrote: Datafever wrote: Murphy Siding wrote: Datafever: Not to discourage discussion on this thread, but....There is an extensive thread from back a ways, all about open acccess. It would give you the background of the idea, and of the views and personality conflicts on this forum involving discussion of open access. http://www.trains.com/trccs/forums/534818/ShowPost.aspx Thanks for the pointer. I have begun reading through it, but I am only on page three and already I have more questions. Maybe some will get answered.What's your take? Is it preferable to begin a new thread, or is it better to resurrect an old thread? Either/Or. The old thread will give you some background on the discussion. It's kind of like having a better understanding of a movie sequel, if you've seen the original movie first. One good thing that did come out of that thread, is that it sort of spawned the British Railways thread that I enjoy. It has a fair discussion at the beginning about open access in Britain:http://www.trains.com/trccs/forums/531254/ShowPost.aspx
Datafever: I like this forum, because I can learn a lot of stuff about things that interest me, and things I didn't even know interested me. These things can be as diverse as open access, or the curvature of the earth. All of it can be discussed in a mature, thoughtful way. (In a perfect world, at least). A few subjects do bring out the most passionate responces from some posters. For example,The Milwaukee Road, Montana Wheat farming, Steam vs. Diesel, graffitti,Open Access,EMD vs. GE, and labor unions. All those topics bring out the *best* and the *worst* in all of us. The open access thread is the first time (maybe the only time(?) ) that I was called an *idiot* for having a differing opinion. I think it also marked the first time I was called a *scoundrel* by a certain poster. But then, most of us have been called a scoundrel by that poster, so at least I know I'm in good company.
At the risk of starting a *discussion*, what is your point of view on open access?
Murphy Siding wrote: At the risk of starting a *discussion*, what is your point of view on open access?
Datafever wrote:... I was hoping to learn to what extent railroads are moving in the direction of open access by mutual consents....
bobwilcox wrote:Shippers are forcing "open access" as they seek ways to reduce their logistics costs. Virtually all of my shippers served by one railroad took action to gain access to another railroad or used the threat of gaining access ...
Datafever wrote: I am sitting here, wondering if I really want to discuss open access on this forum. I acknowledge that there are only a handful of forum readers that have participated in these discussions. Perhaps there are quite a few more that read and learn without participating, I don't know. But I do know this - there is not a lot of "fun" in discussing a topic when all of the participants agree with each other. Not much learning either.
Our community is FREE to join. To participate you must either login or register for an account.