Regulation in a ‘Deregulated’ Industry: Railroads in the Post-Staggers Era

By: John W. Mayo (Georgetown University) and David E. M. Sappington (University of Florida)
Date: June 2015

The Staggers Rail Act of 1980 is widely perceived to have deregulated the U.S. freight rail industry. Yet substantial rail traffic remains potentially subject to regulatory rate intervention, and in the Post-Staggers era regulators have developed a detailed and expanding regulatory framework for rail shipments.

This regulatory framework embodies elements of traditional public utility regulation, including fully distributed costing and, prospectively, earnings regulation. We document the development of the current regulatory framework and provide a cautionary appraisal of potential future industry regulation.

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