Opinion ID: 403665
Heading Depth: 4
Heading Rank: 3

Heading: Incentives for Productivity Growth

Text: 59 We also fail to find a reasoned basis for the Commission's assumption that an average productivity adjustment would undermine incentives for productivity growth. Although the Commission retreated from its original statement that a productivity adjustment would eliminate such incentives, it has continued to assert that a productivity adjustment would have an adverse effect on incentives for productivity growth. 31 In adhering to this position, the Commission has failed to provide any supporting analysis, or answer cogent arguments made by the shippers' witnesses. These witnesses argued that an average adjustment for productivity growth should not affect the incentives facing any individual railroad. 32 They suggested that if automatic rate increases were adjusted for average productivity growth, individual railroads would have an incentive to recoup gains from above average performance or to avoid the penalty effects of below average performance. While we recognize that the science of quantifying economic incentives is far from exact, we would expect the Commission to provide some indication of its answer to these significant comments. Otherwise, the Commission's bald assertion that a productivity adjustment would adversely affect incentives for productivity growth is an inadequate basis for ignoring potentially significant element of railroad costs.