C&RP 777 – Transportation Regulation

Course Description

This course, offered every two years, is a survey of major topics in the economics of transportation regulation, geared towards substantive policy concerns and the analytical tools necessary to address those concerns. The focus of this course will be on assessing the role of government in intercity (primarily passenger air and surface freight) and urban transportation. A companion course, C&RP 776, offered every Winter, focuses on questions of investment in highway infrastructure and on urban transport concerns. Neither course is a prerequisite for the other.

Course Format

Lectures. Evaluation will be on the basis of a required paper. This paper may be on any topic within the economics or planning of transportation; however, you should clear your topic with the instructor before beginning work. There are no examinations for this course; hence it is expected that the paper will represent a substantial research effort on your part. In particular, a paper which summarizes a literature and does no original work is not acceptable.

The paper is due no later than the date of the scheduled final examination for the course (or, if you are graduating. six weekdays before graduating students’ grades are due): check the Master Schedule of Classes or with the Graduate School for the applicable date.

Prerequisites

C&RP 771 or equivalent; C&RP 781 or equivalent. The lectures will presuppose some knowledge both of quantitative methods and microeconomics. If your doubt your preparation, see the instructor.

Readings

I shall prepare a packet of most of the material from journals on the reading list, which you will be able to check out from Ellen Wallace’s office (131 Brown). Note that many of the journals are not carried by the Science Library: you should look in the Business School Library.

COURSE OUTLINE AND READING LIST

1 Basic Orientation: Perfect Competition and Why It’s Good

C. L. Schultze, The Public Use of Private Interest, Brookings Institution, Washington, D.C., 1977

You may also want to review the economics of perfect competition. Some standard references are (most of these are available in later editions: I cite just the edition I happen to have):

E. Mansfield, Microeconomics, W. W. Norton, 1970

W. J. Baumol, Economic Theory and Operations Analysis, Prentice Hall, Englewood Cliffs, NJ, 2nd edn., 1965

H. R. Varian, Intermediate Microeconomics, W. W. Norton, New York, N.Y, 1984

H. R. Varian, Microeconomic Analysis, W.W. Norton, New York, 1984 (advanced)

2 Introductory Survey of Transportation Economics

Clifford M. Winston, Conceptual developments in the economics of transportation: an interpretive survey, Journal of Economic Literature, XXIII:pp. 57–94, Mar. 1985

J. R. Meyer and W. B. Tye, The regulatory transition, American Economic Review, 75(2):pp. 46–51, 1985

3 Air Deregulation — Background

Theodore E. Keeler, Airline regulation and market performance, Bell Journal of Economics, 3(2):pp. 399–424, 1972

Theodore E. Keeler, Domestic trunk airline regulation: An economic evaluation, in: Study on Federal Regulation, 1978, S. Doc 96–14, 96 Cong. 1 Sess

G. W. Douglas and III J. C. Miller, Economic Regulation of Domestic Air Transport, Brookings Institution, Washington, D. C., 1975

D. W. Caves, L. C. Christensen, and M. W. Tretheway, Economies of density versus economies of scale: Why trunk and local-service airline costs differ, Rand Journal of Economics, 15(4):pp. 471–489, 1984

4 Air Deregulation — Assessment

Steven A. Morrison and Clifford M. Winston, The Economic Effects of Airline Deregulation, Brookings Institution, Washington, D. C., 1986

Steven A. Morrison and Clifford M. Winston, The Evolution of the Airline Industry, Brookings Institution, Washington D. C., 1995

E. E. Bailey, D. R. Graham, and D. P. Kaplan, Deregulating the Airlines, M.I.T. Press, Cambridge, MA, 1985

D. R. Graham, D. P. Kaplan, and D. S. Sibley, Efficiency and competition in the airline industry, Bell Journal of Economics, 14(1):pp. 118–138, 1983

Steven A. Morrison and C.M. Winston, Intercity transportation route structures ander deregulation: some assessments motivated by the airline experience, American Economic Review, 75(2):pp. 57–61, 1985

5 Pricing and Investment in Airports

S. A. Morrison, Estimation of long-run prices and investment levels for airport runways, in: T.E. Keeler, ed., Resarch in Transportation Economics: I, pp. 103–130, JAI Press, Greenwich, CT, 1982

6 Surface Freight Operations — Background

Theodore E. Keeler, Railroads, Freight and Public Policy, Brookings Institution, Washington, D. C., 1983

Clifford M. Winston, The welfare effects of ICC rate regulation revisited, Bell Journal of Economics, 12(1):pp. 232–244, 1981

A. F. Freidlaender, The Dilemma of Freight Transport Regulation, Brookings Institution, Washington, D.C., 1969

R. C. Levin, Railroad rates, profitability and welfare under deregulation, Bell Journal of Economics, 12(1):pp. 1–26, 1981

R. M. Spann and E. W. Erickson, The economics of railroading: the beginnings of cartelization adn regulation, Bell Journal of Economics, 1(2):pp. 227–244, 1970

More advanced material:

Theodore E. Keeler, Railroad costs, returns to scale and excess capacity, Review of Economics and Statistics, 56(2):pp. 201–8, 1974

A. F. Friedlaender and R. H. Spady, Freight Transport Regulation, MIT Press, Cambridge, Ma., 1981

R. G. Harris, Economies of traffic density in the rail freight industry, Bell Journal of Economics, 8(2):pp. 556–564, 1977

R. H. Spady and A. F. Friedlaender, Hedonic cost functions for the regulated trucking industry, Bell Journal of Economics, 9(1):pp. 159–179, 1978

7 Deregulation of Surface Freight Transport — Assessment

Clifford M. Winston, T. M. Corsi, C. M. Grimm, and C. A. Evans, The Economic Effects of Surface Freight Deregulation, Brookings Institution, Washington, D.C., 1990

8 “Deregulation” of Intercity Highways

Philip A. Viton, Private roads, Journal of Urban Economics, 27B(5):pp. 401–412, 1995

9 Privatization of Urban Transit

E. K. Morlok and P. A. Viton, Self-sustaining public transportation services, Transport Policy and Decision-Making, 1:pp. 169– 94, 1980

E. K. Morlok and P. A. Viton, Recent experience with successful private transit in large U.S. cities, in: C. A. Lave, ed., Public Transit, Ballinger, Cambridge, Ma, 1985

Philip A. Viton, The possibility of profitable bus service, Journal of Transport Economics and Policy, 14(3):pp. 295–314, 1980

Philip A. Viton, Privately-provided urban transport services: Entry deterrence and welfare, Journal of Transport Economics and Policy, 16(1):pp. 85–94, 1982

10 Governmental Decision-Making

D. McFadden, The revealed preferences of a government bureaucracy: Theory, Bell Journal of Economics, 6(2):pp. 401– 16, 1975

D. McFadden, The revealed preferences of a government bureaucracy: Empirical evidence, Bell Journal of Economics, 7(1):pp. 55–72, 1976

T. W. Ross, Uncovering regulators’ social welfare weights, Rand Journal of Economics, 15(1):pp. 152–55, 1984

Clifford M. Winston and Chad Shirley, Alternate Route: Toward Efficient Urban Transportation, Brookings Institution, Washington D. C., 1998, chapter 5.  .

11 Efficiency Studies

W. H. Greene, The econometric approach to efficiency analysis, in: H. G. Fried, C. A. Knox Lovell, and S. S. Schmidt, eds., The Measurement of Productive Efficiency, pp. 68–119, Oxford University Press, Oxford, 1993

R. Färe, S. Grosskopf, and C. A. K. Lovell, Production Frontiers, Cambridge University Press, Cambridge, 1994

P.A. Viton, Technical Efficiency in US Airline Operations: A Comparative Study. (application and comparison of many of the techniques discussed in the previous 2 references, to airlines).

Last Revised: March 29, 2000 at 18:30 PM