By: Steve Pociask, American Consumer Institute President & CEO
The reduction in price and route regulations during the early 1980s brought back the U.S. railroads from the brink of bankruptcy, as rail doubled its productivity. With real prices 45% lower today than in 1980, consumers receive an estimated $10 billion in annual economic benefits.
However, the success of the industry is now in jeopardy, as regulators ponder new rules that would control the use of traffic on privately-owned track and do so at regulated prices. This study reviews the historical turnaround in the industry and the new regulatory threat it faces. Our economic analysis of market structure, conduct and performance finds no evidence of a market failure to justify reregulating the industry and reversing the gains made in the last thirty-five years.