ABSTRACT
This study contributes to our understanding of cost efficiencies in the U.S. rail industry by estimating a normalized quadratic cost equation that includes as outputs the three types of freight train transport services. If economies of scope exist, having multiservice railroad carriers would be efficient. Results from this study’s estimations suggest that 96.7% and 70.44% of observations display economies of scope before and after imposing input price concavity, respectively. Therefore, it is reasonable to suggest that total abandonment of transport services such as short-haul is not necessarily cost effective. Indeed, evidence from this study shows many of these carriers continue providing such services in the form of way transport.
