01697696

Component

Railroads remain the most important transportation mode for the movement of U.S. bulk agricultural products. But for some commodities and regions, competition via intermodal transportation can be difficult to access. More specifically, in those cases where wheat shippers have proximate access to only two Class I railroads, there remains a concern as to whether railways actively compete in this situation. Using waybill data and structural econometric modeling, the authors evaluate regional level market structure in two distinct duopoly markets for wheat transportation. In addition, the authors run two alternative econometric specifications for their market power parameter. The benefits of the latter: 1) they are free from the need to directly estimate the marginal costs of rail transportation; and 2) real-time changes in market structure can be identified in the model output. The authors find that the two Class 1 railways serving the North Dakota corridor are likely to remain in a state of very limited competition. However, on the Kansas-Oklahoma-Houston routing, the authors find that on average market structure in rail is somewhat more competitive than the other corridor. Given the broad similarities in these markets, we offer that the reason for the differences in assessed market power is likely due to the availability of accessible intermodal competition (i.e. barge and truck) for wheat on the Kansas-Houston/Oklahoma-Houston route.

This paper was sponsored by TRB committee AT030 Standing Committee on Agriculture and Food Transportation.

19-00842

English

27p

2019

Transportation Research Board 98th Annual Meeting

Digital/other

Figures; References; Tables

Agricultural economics; Agricultural products; Econometrics; Freight transportation; Intermodal transportation; Market assessment; Railroad rails; Wheat

Economics; Freight Transportation

Transportation Research Board Annual Meeting 2019 Paper #19-00842

TRIS, TRB, ATRI

Dec 7 2018 9:34AM