The Cost of Railroad Regulation: The Disintegration of American Agricultural Markets in the Interwar Period
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The Cost of Railroad Regulation : The Disintegration of American Agricultural Markets in the Interwar Period. / Federico, Giovanni; Sharp, Paul R.
Department of Economics, University of Copenhagen, 2011.Research output: Working paper
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TY - UNPB
T1 - The Cost of Railroad Regulation
T2 - The Disintegration of American Agricultural Markets in the Interwar Period
AU - Federico, Giovanni
AU - Sharp, Paul R.
N1 - JEL classification: K23, L51, N5, N7
PY - 2011/6
Y1 - 2011/6
N2 - 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).
AB - 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).
KW - Faculty of Social Sciences
KW - market integration
KW - price convergence
KW - United States
KW - agriculture
KW - transportation
KW - transportation regulation
M3 - Working paper
BT - The Cost of Railroad Regulation
PB - Department of Economics, University of Copenhagen
ER -
ID: 33594753