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

The Effects of the Interstate Commerce Act on Transport Costs: Evidence from Wheat Prices 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. Review of Industrial Organization Springer Journals

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

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Springer US
Copyright © 2013 by Springer Science+Business Media New York
Economics / Management Science; Industrial Organization; Microeconomics
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