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At present, U.S. railroads own about 595,000 railcars and lease an additional 717,000. The demand for rail freight services has increased markedly in recent years as the booming ethanol industry has sought rail transport of raw ingredients, by-products, and finished ethanol. The resulting rise in the price of rail freight services has increased railroads' marginal revenue product, so demand for railcars has also increased. Manufacturers' average annual product of railcars has been more than doubled since the early 2000s, to in excel of 60,000 railcars per year. What would likely happen to the demand for railcars if the ethanol boom were to go bust?

Microeconomics, Economics

  • Category:- Microeconomics
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