Spatial Competition, Strategic Entry Responses, and the North Dakota Railroad War of 1905

37 Pages Posted: 11 Jun 2024

See all articles by Chad Syverson

Chad Syverson

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 10, 2024

Abstract

The North Dakota Railroad War of 1905, which pitted a potential entrant (the Soo Line) against an established monopolist incumbent (the Great Northern Railway), offers a lucid empirical example of strategic behavior, and in particular the potential for entry deterrence through product proliferation. I use detailed geographic data and historical records to examine the profitability of both the incumbent’s and entrant’s potential and chosen strategies. I find that the incumbent could have likely profitably deterred entry. It did not, however, waiting instead to respond only once the entrant began building. This simultaneous entry arguably led to over expansion in the market. I investigate whether the chosen strategies may have ultimately ended up being both unprofitable for the firms involved as well as, potentially, socially wasteful.

JEL Classification: L1,L9,N7

Suggested Citation

Syverson, Chad, Spatial Competition, Strategic Entry Responses, and the North Dakota Railroad War of 1905 (June 10, 2024). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2024-69, Available at SSRN: https://ssrn.com/abstract=4860011 or http://dx.doi.org/10.2139/ssrn.4860011

Chad Syverson (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
4
Abstract Views
32
PlumX Metrics