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Railroads and Competition: The Santa Fe/Southern Pacific Merger Proposal

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  • Pittman, Russell W

Abstract

The "Merger Guidelines" of the U.S. Department of Justice provide the framework for a detailed analysis of the competitive implications of the proposed merger of the Santa Fe and Southern Pacific railroads. Although the gross welfare loss from the merger is found to be large--in the range of $40-230 million per year--the transfers from shippers to the railroads are much larger. Thus, an overall welfare calculus requires not only an accurate estimate of the efficiencies resulting from the merger, but also a judgment as to the welfare relevance of wealth transfers. Copyright 1990 by Blackwell Publishing Ltd.

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  • Pittman, Russell W, 1990. "Railroads and Competition: The Santa Fe/Southern Pacific Merger Proposal," Journal of Industrial Economics, Wiley Blackwell, vol. 39(1), pages 25-46, September.
  • Handle: RePEc:bla:jindec:v:39:y:1990:i:1:p:25-46
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    References listed on IDEAS

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    1. Porter, Michael E, 1976. "Interbrand Choice, Media Mix and Market Performance," American Economic Review, American Economic Association, vol. 66(2), pages 398-406, May.
    2. Nickell, Stephen J & Metcalf, David, 1978. "Monopolistic Industries and Monopoly Profits or, Are Kellogg's Cornflakes Overpriced?," Economic Journal, Royal Economic Society, vol. 88(350), pages 254-268, June.
    3. Pagoulatos, Emilio & Sorensen, Robert, 1986. "What determines the elasticity of industry demand?," International Journal of Industrial Organization, Elsevier, vol. 4(3), pages 237-250, September.
    4. Joseph E. Stiglitz & G. Frank Mathewson (ed.), 1986. "New Developments in the Analysis of Market Structure," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262690934, January.
    5. Cowling, Keith & Waterson, Michael, 1976. "Price-Cost Margins and Market Structure," Economica, London School of Economics and Political Science, vol. 43(171), pages 267-274, August.
    6. Connor, John M & Peterson, Everett B, 1992. "Market-Structure Determinants of National Brand-Private Label Price Differences of Manufactured Food Products," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 157-171, June.
    7. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," Review of Economic Studies, Oxford University Press, vol. 1(3), pages 157-175.
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    Cited by:

    1. Ivaldi, Marc & McCullough, Gerard, 2005. "Welfare Trade-Offs in US Rail Mergers," CEPR Discussion Papers 5000, C.E.P.R. Discussion Papers.
    2. Russ Pittman, 2007. "Consumer Surplus as the Appropriate Standard for Antitrust Enforcement," CPI Journal, Competition Policy International, vol. 3.
    3. Pittman, Russell, 2007. "Options for Restructuring the State-Owned Monopoly Railway," Research in Transportation Economics, Elsevier, vol. 20(1), pages 179-198, January.
    4. R. Pittman, 2009. "Railway Mergers and Railway Alliances: Competition Issues and Lessons for Other Network Industries," Competition and Regulation in Network Industries, Intersentia, vol. 10(3), pages 259-279, September.
    5. Russell Pittman, 2003. "Vertical Restructuring (or Not) of the Infrastructure Sectors of Transition Economies," Journal of Industry, Competition and Trade, Springer, vol. 3(1), pages 5-26, March.
    6. Robert W. Crandall & Clifford Winston, 2005. "Does antitrust policy improve consumer welfare? Assessing the evidence," Chapters,in: Governments, Competition and Utility Regulation, chapter 2 Edward Elgar Publishing.
    7. Affuso, Luisa & Newbery, David M G, 2000. "Investment, Reprocurement and Franchise Contract Length in the British Railway Industry," CEPR Discussion Papers 2619, C.E.P.R. Discussion Papers.
    8. Russell Pittman, 2009. "Competition Issues in Restructuring Ports and Railways, Including Brief Consideration of these Sectors in India," EAG Discussions Papers 200906, Department of Justice, Antitrust Division.
    9. Wilson, Wesley W. & Bitzan, John, 2003. "Industry Costs and Consolidation: Efficiency Gains and Mergers in the Railroad Industry," MPC Report 231700, North Dakota State University, Upper Great Plains Transportation Institute.
    10. Pittman, Russell, 2011. "Risk-averse restructuring of freight railways in China," Utilities Policy, Elsevier, vol. 19(3), pages 152-160.
    11. Schmidt, Stephen, 2001. "Market structure and market outcomes in deregulated rail freight markets," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 99-131, January.
    12. repec:oup:jcomle:v:13:y:2017:i:1:p:89-102. is not listed on IDEAS
    13. Russell Pittman, 2017. "The Strange Career Of Independent Voting Trusts In U.S. Rail Mergers," Journal of Competition Law and Economics, Oxford University Press, vol. 13(1), pages 89-102.
    14. John Bitzan & Wesley Wilson, 2007. "Industry costs and consolidation: efficiency gains and mergers in the U.S. railroad industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(2), pages 81-105, March.
    15. Russell Pittman, 2001. "Vertical Restructuring of the Infrastructure Sectors of Transition Economies," Industrial Organization 0111002, EconWPA.
    16. Russell Pittman, 2002. "Chinese Railway Reform and Competition: Vertical or Horizontal Restructuring?," Development and Comp Systems 0204004, EconWPA.
    17. Richard L. Schmalensee & Wesley W. Wilson, 2016. "Modernizing U.S. Freight Rail Regulation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(2), pages 133-159, September.

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