Deregulation in Railroads: Assessing Economic and Policy Changes

This essay examines the deregulation of the railroad industry in the United States during the 20th century and its subsequent impact on the nation's economy. Initially, the railroads were heavily regulated by the Interstate Commerce Commission (ICC) to prevent monopolies and ensure public ...Read More

Running head: DEREGULATION IN RAILROADS
DEREGULATION IN RAILROADS
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1DEREGULATION IN RAILROADS
Table of Contents
Change in Policy for Deregulation in the Railway Industrial Sector.........................................2
References..................................................................................................................................3

2DEREGULATION IN RAILROADS
Change in Policy for Deregulation in the Railway Industrial Sector
In the railroads of United States, the deregulation that occurred in the 20th Century
proved to have a positive and significant impact on the economy of the rail industry of the
nation. The railroads provided service to the common people and thus, was bound by the
government regulations to avoid monopolies such that it can be accessed openly. In the year
1887, the Interstate Commerce Commission, a regulatory board applied its power over
controlling freight rates, overlooking the mergers as well as the acquisitions (Loveland et al.,
2018). It also removed ownership from different modes, thereby increasing competition
amongst them. This led to the loss of market share in the railroads industry. Eventually, the
industry had to carry out its operations in highly controlled environments and failed to make
way for innovations, thereby losing customers to the airline industry.
However, to overcome this situation and save the industry from forthcoming collapse,
the makers of the policy by the year of 1960 incorporated the regulatory reforms. Almost,
one-third of the industry in railways was already penniless and according to the experienced
economists, the members from the industry itself captured the regulatory boards. In the year
of 1976, the first round in changing the policies happened in introducing the ‘Railroad
Revitalization and Regulatory Reform Act’ that comprised of reconsidering price rates,
abandonment of line as well as mergers (McKenzie, 2017). The Staggers Rail Act that came
around in 1980 streamlined the timetables of the mergers, granted freedom in setting price
rates, permitted confidential contracts with shippers and allowed for multi-modal
proprietorship. Thus, with this change in policies, the railway industry could invest in
profitable passenger business, concentrate on the activities of core freight and thereby, reduce
operational costs by incorporating various innovations.

3DEREGULATION IN RAILROADS
References
Loveland, R., Mulherin, J. H., Okoeguale, K., & Athletic, G. (2018). Deregulation, Listing
and Delisting.
McKenzie, T. (2017). Railroads, Their Regulation, and Its Effect on Efficiency and
Competition.