I found this report analying what this person believes will happen when the next round of merger starts. Thought some people around here would find this interesting.
http://www.strom.clemson.edu/publications/whitehurst/railmerger.pdf
If the STB sticks by it’s guns, there will be no more mergers unless such a merger results in increased competition. To what extent a trackage or haulage rights agreement can emulate a market based competitive scenario is hard to quantify. Is a duopoly (as a result of merger/trackage rights ) sufficient if it replaces a monopoly, or will there be a need for triopoly or more?
Geez already - just break up the vertical integration and move forward!
Thanks for the post. I was kinda hoping it would theorize on “what if” certain railroad mergers happened, but the report kinda left me hanging at the end…kinda like sitting through a long joke that had no punch line at the end.
I was under the assumption that vertical integration meant that a manufacturer (such as United States Steel) owned the sources of raw material for their product (ore, limestone and coal mines) as well as the means of production (steel mills of all types) for their product (finished & semi-finished steel).
If you wish to break up vertical integration, does this include separating the producers of electric power from ownership of transmission and distribution networks, like we have in Illinois?
The utility companies are really sticking it to the little guys now, arent they?
Dave, I think you should turn your tremendous skills towards the utilities. Have you seen what they are doing? 60% rate increases to Illinois customers. I thought the open access was going to lower rates.
ed
Didn’t have to, did we? Because the utilities all accepted OA over their transmission lines, instead of trying to fight it with junk economics and end-of-the-world horror stories. Goodness, Al Gore and his global warming horror flick has more legitimacy than the railroads with their OA opposition.
All other inputs being constant, you would have had lower rates. But throw in a tripling of natural gas prices, stricter coal plant emissions regs, captive rail rates for coal consumers, coal delivery shortfalls by the railroads, new renewable generation regs, a virtual ban on building new hydroelectric facilities, a plethora of environmental disincentive to build as demand warrants, etc. etc. and you’ve got yourself a higher electric bill. You see, under regulation the utilities pass on costs to consumers, and those cost inputs are now soaring.
That 60% rate increase? Think of it as a Green Tax if it makes you feel better.
But don’t blame the railroads! (insert the blatant irony smilie here)