MPC Research Reports
Report Details

Title:	Economies of Size and Density for Short Line Railroads
Authors:	Frank Dooley
University:	North Dakota State University
Publication Date:	Apr 1991
Report #:	MPC-91-2
Project #:	MPC-001
TRID #:	00639871
Keywords:	cost estimating, costs, economies of scale, elasticity (economics), estimates, guides to the literature, history, literature reviews, short line railroads, simulation, size

Abstract

The overall objective was to determine the extent that economies of size and density are available to short line railroads. Size economies are limited for short line railroads. For example, doubling the size of the network (from 56 to 129 miles) decreases costs by only 6.9 percent. The elasticity of total cost with respect to size was between 0.60 and 0.80. This is consistent with the findings for Class I carriers. Increasing traffic density offers significant opportunities for lowering costs. An increase in the traffic density from 20 to 30 cars per mile lowers average total costs by 30 percent. The elasticity of total cost with respect to density was 0.16. Thus, the concern with new short lines should be with the traffic density, not the size of the network.