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The Economics of Railroading: The Beginning of Cartelization and Regulation

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  • Robert M. Spann
  • Edward W. Erickson

Abstract

This paper contains an analysis of the need for and effect of regulation in the railroad industry at the inception of the Interstate Commerce Commission. The authors briefly review and integrate a substantial body of literature that has developed over a period of more than half a century. Next they examine the cost conditions under which railroads operated in the latter part of the 19th century and disentangle the separate effects of technological change and economies of large output. Finally, they estimate approximate elasticities of demand in the long and short-haul markets in the trunkline cartel area. These elasticities are used to calculate the relative magnitudes of the gains and losses resulting from the behavior of the railroads in response to the particular form of rate regulation imposed by the ICC.

Suggested Citation

  • Robert M. Spann & Edward W. Erickson, 1970. "The Economics of Railroading: The Beginning of Cartelization and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 1(2), pages 227-244, Autumn.
    • Handle: RePEc:rje:bellje:v:1:y:1970:i:autumn:p:227-244
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    Cited by:

    1. Chow, Ming H. & Sorenson, L. Orlo, 1986. "Railroad Pricing in Grain Transportation Markets: A Kansas Case Study," 1986 Annual Meeting, July 27-30, Reno, Nevada 278175, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Morris Fiorina, 1982. "Legislative choice of regulatory forms: Legal process or administrative process?," Public Choice, Springer, vol. 39(1), pages 33-66, January.
    3. Robert B. Ekelund Jr & Edward O. Price III, 2012. "The Economics of Edwin Chadwick," Books, Edward Elgar Publishing, number 14915.
    4. Robert Ekelund & Richard Saba, 1981. "A note on politics and franchise bidding," Public Choice, Springer, vol. 37(2), pages 343-348, January.
    5. Bruce Blonigen & Anca Cristea, 2013. "The Effects of the Interstate Commerce Act on Transport Costs: Evidence from Wheat Prices," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 43(1), pages 41-62, August.
    6. Waters II, William G., 2007. "Evolution of Railroad Economics," Research in Transportation Economics, Elsevier, vol. 20(1), pages 11-67, January.
    7. Soltwedel, Rüdiger & Busch, Axel & Groß, Alexander & Laaser, Claus-Friedrich, 1987. "Zur staatlichen Marktregulierung in der Bundesrepublik," Open Access Publications from Kiel Institute for the World Economy 1085, Kiel Institute for the World Economy (IfW Kiel).
    8. Paul L. Joskow & Roger G. Noll, 1981. "Regulation in Theory and Practice: An Overview," NBER Chapters, in: Studies in Public Regulation, pages 1-78, National Bureau of Economic Research, Inc.
    9. Kevin Henrickson & Wesley Wilson, 2013. "Voting, Regulation, and the Railroad Industry: An Analysis of Private and Public Interest Voting Patterns," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 43(1), pages 21-39, August.

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