ABSTRACT
Original Editor’s note.—Over the past fifteen years, settled patterns of regulation of transport rates and services have been subjected to increasing scrutiny and criticism not only from academic economists but also from producers and users of transportation, public officials, and the public in general. The largest single reason for this heightening of interest has been the increasingly severe competitive and financial position of the railroad industry. While the operation and regulation of any one mode of transportation cannot be considered in isolation, much of the present discussion of transport regulation properly centers on the railroads. An important topic has been the search for regulatory principles and procedures which would yield the maximum public benefit from railroad plant and technology under present competitive conditions. The following statement was prepared under the auspices of the Association of American Railroads, an obviously interested party and one that has done much to stimulate broad interest in the regulatory problems of its members. The statement represents a consensus of ten economists, most of whom will need no introduction to readers of this Journal. It is published here as a contribution to the discussion of the business and regulatory economics of transportation and of other industries, both within and outside the public utility field. Specifically, the panel of economists undertakes to clarify the economic principles of costs that are relevant as a guide to the pricing of particular railroad services. The statement, concerned with concepts of cost, should help to provide an essential groundwork for the development of improved techniques for the measurement of relevant costs in specific situations.
