Transportation Rates and Economic Development in Northern Ontario

This book examines the influence of transport costs on regional economic development in northern Ontario. It begins with an overview of the Canadian freight rate structure, with emphasis on railway rates, and a brief look at the history of federal rate policy. A theoretical model of rate determination is then constructed to permit measurement of the impact on producers and consumers of alternative rate-setting policies. Using econometric techniques and 1975 data, rate changes are related to the inputs and outputs of northern Ontario’s economy, and the effect on the region of subsidies and regulations is discussed.

Freight rates on inbound shipments are found to be much higher than on goods exported from the area. A central discovery is that regulations limiting competition in the Ontario trucking industry have raised highway freight rates significantly beyond the national average. In this situation transport subsidies are unlikely to affect rates, Professor Bonsor argues; the most effective way to lower unduly high freight rates in northern Ontario, he suggests, is to eliminate entry restrictions and promote vigorous competition in the highway trucking industry.