Book Review: The Economics of Freight Car Supply

• Author: James Sloss
• Published date: 01 March 1982
• Date: 01 March 1982
• DOI: http://doi.org/10.1177/0003603X8202700111
• Subject Matter: Book Reviews

The Antitrust Bulletin/Spring 1982 277

The Economics

of

Freight Car Supply

John Richard Felton

Lincoln, Nebraska: University of Nebraska Press (1978),

118

pp.,

$9.50.

Reviewed by James Sloss, Senior Lecturer, Massachusetts

Institute

of

Technology, Cambridge, Massachusetts.

The Economics

of

Freight Car Supply represents an endeavor to

apply microeconomic theory to one

of

the most intractable

problems confronting the railroad industry

of

the U.S. That

problem concerns the supply and utilization

of

the nation's

freight car fleet. The problem is compounded by the fact that

more than 50% of all railway shipments move over the lines

of

two or more railroad companies, necessitating arrangements for

the interchange of cars between participating carriers and a

system of compensation whereby the railroad owning a car can be

reimbursed when the car is on the rails

of

a"foreign" company.

Such payments are referred to as per diem.

Professor Felton has directed attention to two major require-

ments inherent in any scheme of compensation: first, the level of

the payment by one railroad to another for the use

of

its car must

reflect the true cost of ownership; and second, the schedule

of

charges must be sufficient to enable the totality

of

the railroad

network to maintain a fleet

of

serviceable cars adequate to meet

the demand of shippers and minimize the frequently-occurring

phenomenon of car shortages. He notes that the problem

of

matching supply and demand involves not only the number of

cars comprising the fleet but also their utilization. After present-

ing statistical evidence of the deficiency

of

current railroad

operating practices, the author states:

"If

the foregoing consider-

ations fall short of convincing proof of poor freight car utiliza-

©1982by FederalLegal Publications. Inc.