The Cost of Railroad Regulation: The Disintegration of American Agricultural Markets in the Interwar Period
AbstractWe investigate the costs of transportation regulation using the example of agricultural markets in the United States. Using a large database of prices by state of agricultural commodities, we find that the coefficient of variation (as a measure of market integration between states) falls for many commodities until the First World War. We demonstrate that this reflected changes in transportation costs which in turn in the long run depended on productivity growth in railroads. 1920 marked a change in this relationship, however, and between the First and Second World Wars we find considerable disintegration of agricultural markets, ultimately as a consequence of the 1920 Transportation Act. We argue that this benefited railroad companies in the 1920s and workers in the 1930s, and we put forward an estimate of the welfare losses for the consumers of railroad services (i.e. agricultural producers and final consumers).
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 11-17.
Length: 26 pages
Date of creation: Jun 2011
Date of revision:
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market integration; price convergence; United States; agriculture; transportation regulation;
Other versions of this item:
- Giovanni Federico & Paul Sharp, 2013. "The cost of railroad regulation: the disintegration of American agricultural markets in the interwar period," Economic History Review, Economic History Society, vol. 66(4), pages 1017-1038, November.
- Federico, Giovanni & Sharp, Paul, 2012. "The cost of railroad regulation: The disintegration of American Agricultural Markets in the interwar period," Discussion Papers of Business and Economics 20/2012, Department of Business and Economics, University of Southern Denmark.
- K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
- N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-06-25 (Agricultural Economics)
- NEP-ALL-2011-06-25 (All new papers)
- NEP-HIS-2011-06-25 (Business, Economic & Financial History)
- NEP-LAW-2011-06-25 (Law & Economics)
- NEP-REG-2011-06-25 (Regulation)
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- Sharp, Paul & Uebele, Martin, 2013. "Rural Infrastructure and Agricultural Market Integration in the United States: A long run perspective," Discussion Papers of Business and Economics 10/2013, Department of Business and Economics, University of Southern Denmark.
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