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D eregulation , M ergers , and C ost S avings in C lass I U.S. R ailroads , 1974‐1986
Author(s) -
Vellturo Christopher A.,
Berndt Ernst R.,
Friedlaender Ann F.,
Chiang Judy ShawEr Wang,
Showalter Mark H.
Publication year - 1992
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1430-9134.1992.00339.x
Subject(s) - consolidation (business) , deregulation , business , economics , finance , macroeconomics
In this paper we attempt to disentangle the effects of deregulation on rail costs from those directly attributable to mergers. We estimate that cost reductions obtained from mergers ranged from a high of 33% for the Burlington Northern to a low of a 3% cost increase for the CSX. However, firms not engaged in significant merger activities experienced similar cost differentials indicating that consolidation was not a prerequisite for cost savings. We conclude that although mergers did confer some benefits on the participating firms, they were not a prerequisite for railroads being able to achieve substantial cost savings.

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