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Common ownership in transportation

University of British Columbia

The Problem: If common ownership of transportation modes is allowed, do the benefits of improved co-ordination of service between the various modes and the economies of joint management exceed the dangers of monopoly power that could be obtained by a large firm engaged in all modes of transportation? Methods of Investigation: Literature was reviewed to try to determine whether or not the logic of allowing a firm to engage in all forms of transportation is stronger than the logic of segregating the modes within the transportation-system. The arguments of those in favor of allowing common ownership are presented from a railway point of view. These individuals point to the financial plight of the railroads in today's transportation system. They argue that the railroads should be allowed to diversify to better utilize today’s intermodal techniques and economize by using the best combination of modes or a particular mode to suit the shipper's needs. Those opposed to common ownership feel that competition between the modes will be reduced and the rate of technological innovation will decline. They feel that railroad companies will gain monopoly powers that would be detrimental to the public interest. In the United States policy makers restrain common ownership and advocate voluntary co-operation between the modes. History of regulatory policy regarding common ownership is reviewed to try to determine if restraint has been beneficial to the transportation system. The nationalized period of British transportation is also reviewed to try to determine whether or not the pitfalls of this system of regulation could lead to the failure of a transportation system in which common ownership is allowed. Finally the history of the effects of no restriction of common ownership in Canada is studied. The extent of common ownership in Canada is described, with special attention given to the Province of British Columbia. An effort is made to try to determine if any monopoly power is apparent in the Canadian transportation system as a consequence of common ownership. Conclusions: Of the three approaches to regulation, the Canadian approach, of allowing common ownership holds the greatest promise of meeting today's transportation needs with the best techniques available. This approach is not based on the preservation of historical systems of transportation and the fear that railroads could again dominate transportation. It is possible, however, that large transportation companies could successfully administer prices if not closely controlled by regulatory bodies. The management of a transportation company should seek to use the most economic means of movement available, without bias toward a particular mode. If this is done both the company and the shipper will benefit from the use of the most modern techniques available in today's transportation system and improved techniques will arise through continued competition between similar firms and traditionally segregated firms, within future transportation systems. The United States should follow Canada's example in allowing freedom of common ownership.

Text

2011-06-05

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http://hdl.handle.net/2429/35136

Business Administration

University of British Columbia

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