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Railroads and Competition: The Santa Fe/Southern Pacific Merger Proposal

1990; Wiley; Volume: 39; Issue: 1 Linguagem: Inglês

10.2307/2098366

1467-6451

Russell Pittman,

Global trade and economics

The Merger Guidelines of the US Department of Justice provide the framework for a detailed analysis of the competitive implications of the proposed merger of the Santa Fe and Southern Pacific railroads.Although the gross welfare loss from the merger is found to be large-in the range of $40-230 million per year-the transfers from shippers to the railroads are much larger.Thus an overall welfare calculus requires not only an accurate estimate of the efficiencies resulting from the merger but also a judgment as to the welfare relevance of wealth transfers."In the case of railways ... no one can desire to see the enormous waste of capital and land (not to speak of increased nuisance) involved in the construction of a second railway to connect the same places already united by an existing one...."