The Ties that Bind: Railroad Gauge Standards, Collusion, and Internal Trade in the 19th Century U.S
نویسنده
چکیده
I study the conversion of 13,000 miles of railroad track in the U.S. South to standard gauge on May 31 and June 1, 1886 as a large-scale natural experiment in compatibility. Using route-level freight traffic data, I find a large redistribution of traffic from steamships to railroads that declines with distance, with no effect on prices or aggregate shipments due to carriers’ anticompetitive conduct. Counterfactuals suggest that in a competitive market, half of the cost savings from compatibility would have passed through to prices, generating a 10% increase in shipments – though the gauge change itself may come into question. JEL Classification: F15, L15, L92, N71
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