American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Regulation, Ownership, and Costs: A Historical Perspective from Indian Railways
American Economic Journal: Economic Policy
vol. 4,
no. 1, February 2012
(pp. 28–57)
Abstract
This paper studies the relationship between operational costs and state ownership in Indian railways between 1874 and 1912. We find the move to state ownership significantly decreased working expenses. The cost declines are not driven by anticipation effects, changes in reporting standards, or long run trends. Rather, the evidence suggests the colonial Government of India reduced operational costs by cutting labor costs. Our surprising results can be explained by the undemocratic colonial nature of the Government of India, a fiscal system heavily reliant on railways for revenues, and a regulatory environment under private ownership that weakened incentives to lower costs. (JEL L32, L51, L92, N45, N75, O18, R41)Citation
Bogart, Dan, and Latika Chaudhary. 2012. "Regulation, Ownership, and Costs: A Historical Perspective from Indian Railways." American Economic Journal: Economic Policy, 4 (1): 28–57. DOI: 10.1257/pol.4.1.28Additional Materials
JEL Classification
- L32 Public Enterprises; Public-Private Enterprises
- L51 Economics of Regulation
- L92 Railroads and Other Surface Transportation
- N45 Economic History: Government, War, Law, International Relations, and Regulation: Asia including Middle East
- N75 Economic History: Transport, Trade, Energy, Technology, and Other Services: Asia including Middle East
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- R41 Transportation: Demand, Supply, and Congestion; Safety and Accidents; Transportation Noise
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