Estimating Total Factor Productivity Growth: Canadian Freight Railways, 1986 to 2009

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Abstract

This article estimates TFP growth for Canadian National (CN) and Canadian Pacific (CP) railways over 1986-2009 using both index numbers and econometric cost function methods. Combined TFP growth averaged 3.94 per cent per year, far above the business sector average. CN outperformed CP (estimated 4.42 vs. 3.12 per cent using index numbers), with much of the gain attributed to precision railroad operational improvements under Hunter Harrison. The 1995 privatization of CN did not materially change its productivity trajectory.

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