Long-Run Effects of Mergers: The Case of U.S. Western Railroads
We provide a retrospective assessment of the effects of the two recent major railroad mergers in the western United States (Burlington Northern–Atchison-Topeka-Santa Fe and Union Pacific–Southern Pacific) on the price of rail transport of export grain. Estimation accounts for selectivity bias that arises because rail prices are observed only for routes with traffic. Despite concerns that both mergers could harm consumers by reducing carrier competition, we find that, in the long run, the mergers have had negligible effects on grain transportation prices and consumer welfare.
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