Differential Effects Rail Deregulation in the U.S. Grain Industry

The efficiency benefits of U.S. rail industry deregulation are well documented in previous studies of rail productivity and declining rail rates. This research provides new insight regarding the accrual of these benefits within the grain industry. A disaggregate study of corn, wheat, and soybean rates across nine producing regions, shows that in recent years the railroads ability to differentiate markets based on competitive environment has shifted relatively more of the benefit to regions with the most competitive market environments. Regions with less competitive pressure will continue to be relatively more disadvantaged in the rates that are an important determinant in grain market flows and producer profitability if these trends continue.