The Union Pacific/Southern Pacific Railroads Merger: Effect of Trackage Rights on Rates

John Karikari, Stephen M Brown and Mehrzad Nadji

Journal of Regulatory Economics, 2002, vol. 22, issue 3, 85 pages

Abstract: We investigate the impact of the 1996 Union Pacific (UP)/Southern Pacific (SP) railroads merger on rail rates for potential 2-to-1 shippers. As part of its merger conditions, the Surface Transportation Board (STB) granted trackage rights to BNSF to preserve competition for these shippers. Using the STB's Carload Waybill Sample data for the Salt Lake City economic area, we found that the remedy was effective--Burlington-Northern Santa Fe (BNSF) provided more effective competition to UP in the post-merger era than SP did in the pre-merger era. The results, however, differed by commodity, direction of traffic, and shipper-type. Copyright 2002 by Kluwer Academic Publishers

Date: 2002
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