The Cost of Railroad Regulation: The Disintegration of American Agricultural Markets in the Interwar Period
29 Pages Posted: 16 Jun 2011
Date Written: June 16, 2011
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
JEL Classification: K23, L51, N5, N7
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Commodity Market Integration, 1500-2000
By Robert Findlay and Kevin H. O'rourke
-
Commodity Market Integration 1500-2000
By Robert Findlay and Kevin H. O'rourke
-
Land, Labor and Globalization in the Pre-Industrial Third World
-
Freight Rates and Productivity Gains in British Tramp Shipping 1869-1950
-
The Antebellum Transportation Revolution and Factor-Price Convergence
-
India's De-Industrialization Under British Rule: New Ideas, New Evidence