Railroad Deregulation and Consumer Welfare

Railroad deregulation under the Staggers Act of 1980 generated rate reductions, service enhancements, and other improvements in economic welfare. These benefits appear to be widely shared. There is a low likelihood that some captive shippers pay rates that exceed the rates they would have paid under regulation, some evidence that some captive shippers have paid rates that regulators would judge unreasonable, and strong evidence that captive shippers pay higher rates than non-captive shippers. The source of deregulations benefits is as noteworthy as their size and distribution. The principal benefits of railroad deregulation stem from cost reduction, not just a closer alignment of prices with pre-deregulation cost levels.