Grain Shipper/Railroad Contract Disclosure: An Experimental Analysis

The Staggers Rail Act (1980) permitted confidential railroad contracts. Legislation later required disclosure of certain contract terms to allay small shippers' claims of injury. This study uses experimental economics to analyze the effects of information disclosure. The oligoplastic market structure was designed to simulate the market for rail services in the South and Central Great Plains. Contract information was disclosed to test participants under three scenarios: no disclosure, partial disclosure, and full disclosure. The analysis revealed favorable impacts on efficiency but no discernible effect on negotiated prices. An unexpected outcome was profittering by some participants under the partial disclosure format.