The Uncertain Welfare Effects of Railroad Competition and Railroad Regulation, 1870-1900

Forthcoming Journal of Competition Law & Economics (2016)

Yale Law & Economics Research Paper No. 537

24 Pages Posted: 28 Mar 2016 Last revised: 29 Mar 2016

George L. Priest

Yale University - Law School

Date Written: March 28, 2016

Abstract

This essay, written for a memorial contribution on the works of Paul W. MacAvoy, discusses MacAvoy’s first book, The Economic Effects of Regulation (1965) which addresses eastern railroad cartels in the U.S. between the 1870s and 1900. The essay describes the many achievements of this book in terms of detecting and measuring cheating on cartel prices and its discussion of cartel practices of greater or lesser success. The essay also compares railroad practices for chiefly the transport of grain from Chicago to New York to practices over the same period for the transport of refined oil from Pittsburgh and Cleveland to various locations on the east coast. The principal difference as between grain and oil transport was the existence of competitive markets for grain shipment versus the monopsony of the Standard Oil Company over the shipment of refined oil. The net welfare effects of the grain cartels versus the oil monopsony remain unclear.

Suggested Citation

Priest, George L., The Uncertain Welfare Effects of Railroad Competition and Railroad Regulation, 1870-1900 (March 28, 2016). Forthcoming Journal of Competition Law & Economics (2016); Yale Law & Economics Research Paper No. 537. Available at SSRN: https://ssrn.com/abstract=2755643

George L. Priest (Contact Author)

Yale University - Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States

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