Question

In: Economics

Briefly explain the need for alternative models of ownership in transportation. What models seem more appropriate...

Briefly explain the need for alternative models of ownership in transportation. What models seem more appropriate for the railway industry in the US? Why?

Solutions

Expert Solution

US is world's largest economy in the world and it is expected that the country should have the best transportation system in the world. Country's extensive geography makes the case for an efficient mode of transportation that takes care of transportation needs of the people, as well as movement of goods in the economy.

Except highway network in the country, almost all the modes of transportation are owned by private companies, including railways, and airlines.

However with changing times and to keep up with advancement of modes of transportation there is need of change in the ownership of some of the transportation system in the country. Airlines should remain privately owned however government needs to keep an eye on potential collusion of the airline companies to earn monopoly profits. Highways have worked exceedingly well for the country and there is no need of changing much in this mode of transportation.

As far as railways is concerned, comparing the development of railway infrastructure in the country with other counrties such as Germany and France, or most importantly China shows how laggard this neglected sector has been in the country. Private firms have neither improved much of the technology nor have invested enough to make this an ideal mode of transportation. I believe railways must be co-owned by the government in order to bring much needed funds, and transparency to bring significant changes in the sector. For example, government should incentivize development of High speed rail network in the country.

Therefore, most important sector, Railways should be owned by the goevernment along with the private sector for a holistic development of this mode of transportation.


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