The Cost of Railroad Regulation: The Disintegration of American Agricultural Markets in the Interwar Period

Giovanni Federico () and Paul Sharp

No 11-17, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: We investigate the costs of transportation regulation using the example of agricultural markets in the United States. Using a large database of prices by state of agricultural commodities, we find that the coefficient of variation (as a measure of market integration between states) falls for many commodities until the First World War. We demonstrate that this reflected changes in transportation costs which in turn in the long run depended on productivity growth in railroads. 1920 marked a change in this relationship, however, and between the First and Second World Wars we find considerable disintegration of agricultural markets, ultimately as a consequence of the 1920 Transportation Act. We argue that this benefited railroad companies in the 1920s and workers in the 1930s, and we put forward an estimate of the welfare losses for the consumers of railroad services (i.e. agricultural producers and final consumers).

Keywords: market integration; price convergence; United States; agriculture; transportation regulation (search for similar items in EconPapers)
JEL-codes: K23 L51 N5 N7 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-06
New Economics Papers: this item is included in nep-agr, nep-his, nep-law and nep-reg
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The cost of railroad regulation: the disintegration of American agricultural markets in the interwar period (2013)
Working Paper: The cost of railroad regulation: The disintegration of American Agricultural Markets in the interwar period (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:1117

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