Regulating the United States railroads: The effects of sunk costs and asymmetric risk

被引:23
作者
Hausman, J [1 ]
Myers, S [1 ]
机构
[1] MIT, Cambridge, MA 02139 USA
关键词
D O I
10.1023/A:1020822228646
中图分类号
F [经济];
学科分类号
02 ;
摘要
The Surface Transportation Board (STB) applies the theory of contestable markets to regulate dominant railroad freight movements. The STB bases its determination whether railroad revenues are excessive if they would be more than sufficient to support investment in a hypothetical stand-alone railroad designed to handle the at-issue traffic efficiently. The STB regulatory approach does not take correct account of the importance of sunk costs and irreversible investments in the railroad industry. We estimate how large the mistakes can be by applying a real options approach that takes into account the effect of sunk costs, irreversible investment, and asymmetric returns.
引用
收藏
页码:287 / 310
页数:24
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