Maximum Railroad Rates and the Issue of Market Dominance

The authors discuss how the Surface Transportation Board (STB) and Interstate Commerce Commission (ICC), for the most part, fairly consistently found market dominance evident, despite the STB/ICC position on product and geographic competition market dominance being a complete about face, and that finding that market dominance exists is often a foregone conclusion due to determination criteria. Due to findings of market dominance, the STB/ICC was deregulating traffic at the same time it was regulating other cases. This may not be as contradictory as it first appears. Traffic with sufficient competition was deregulated administratively by the STB/ICC. When there were market dominance conditions, the STB/ICC fought against traffic deregulation. Traffic, therefore, determines different policies. Today, market dominance in rail carriage has been found only in plastics, chemicals, grain, and coals, so there is regulation of maximum rates. Despite this, shippers of the aforementioned commodities are unsatisfied, and often assert that STB approves too-high rates when ruling on them. The authors discuss a brief history of regulation, beginning in the late nineteenth century, with market dominance regulation beginning in the late 1970s. The Staggers Rail Act, passed in 1980, is examined, as is competitive access, and geographic and product competition.