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The Effects of the Interstate Commerce Act on Transport Costs: Evidence from Wheat Prices

Bruce Blonigen and Anca Cristea ()

Review of Industrial Organization, 2013, vol. 43, issue 1, 62 pages

Abstract: There is significant debate over the effect of the Interstate Commerce Act (ICA) on the cost of rail transport to shippers. Taking price differences across locations as proxy for transport costs, we use data on wheat prices before and after the implementation of the ICA to see if the Act led to smaller differences in wheat prices across American cities relative to a control group of European cities. We find that the ICA had no effect on US transport costs; however, it reduced their volatility substantially. This evidence supports the view that the ICA helped stabilize cartel prices after a period of significant price wars. Copyright Springer Science+Business Media New York 2013

Keywords: Cartel; Price wars; Railroad; Regulation; Threshold regression (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/s11151-013-9394-8

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Handle: RePEc:kap:revind:v:43:y:2013:i:1:p:41-62