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American Economic Journal: Economic Policy: Vol. 4 No. 1 (February 2012)

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Regulation, Ownership, and Costs: A Historical Perspective from Indian Railways

Article 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.4.1.28

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)

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Authors

Bogart, Dan (U CA, Irvine)
Chaudhary, Latika (Scripps College)

JEL Classifications

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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