Measuring Market Power in Wheat Transportation – A Market Level Analysis

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.

  • Supplemental Notes:
    • This paper was sponsored by TRB committee AT030 Standing Committee on Agriculture and Food Transportation.
  • Corporate Authors:

    Transportation Research Board

    ,    
  • Authors:
    • Su, Chi
    • Nolan, James
  • Conference:
  • Date: 2019

Language

  • English

Media Info

  • Media Type: Digital/other
  • Features: Figures; References; Tables;
  • Pagination: 27p

Subject/Index Terms

Filing Info

  • Accession Number: 01697696
  • Record Type: Publication
  • Report/Paper Numbers: 19-00842
  • Files: TRIS, TRB, ATRI
  • Created Date: Dec 7 2018 9:34AM