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)
Bogart, Dan, and Latika Chaudhary.
"Regulation, Ownership, and Costs: A Historical Perspective from Indian Railways."
American Economic Journal: Economic Policy,
Public Enterprises; Public-Private Enterprises
Economics of Regulation
Railroads and Other Surface Transportation
Economic History: Government, War, Law, International Relations, and Regulation: Asia including Middle East
Economic History: Transport, Trade, Energy, Technology, and Other Services: Asia including Middle East
Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
Transportation: Demand, Supply, and Congestion; Safety and Accidents; Transportation Noise