Competition and Rail Rates for the Shipment of Corn, Soybeans, and Wheat

James MacDonald

RAND Journal of Economics, 1987, vol. 18, issue 1, 151-163

Abstract: This article investigates the extent and importance of rate competition among railroads for the export shipment of three narrowly defined agricultural commodities since passage of the Staggers Rail Act of 1980, which increased the railroads' freedom to set rates. I construct measures of intermodal and intramodal competition, and find that each has strong impacts on rail rates. The farther a shipper is from competing water transportation, the more considerably rates rise. Rates fall as railroad competition in a region increases. There appears to be some interaction between intermodal and intramodal competition. I find that the competitive effects of two proposed rail mergers depend on the vigor of intermodal competition from truck and water transport and on the change in interrailroad competition that results from the reduced number of competing rail systems.

Date: 1987
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