The regulation of railroads

Railroad Regulation in the Late Nineteenth Century

Railroad regulation began in the late nineteenth century as a result of the recognition that railways controlled the transportation business (Gómez-Ibáñez, J. A., & de Rus, 2006). Around this time, the automotive and aviation industries were in their infancy. As a result, railroads were the dominant mode of transportation for moving people and merchandise. In response to this monopoly, the government intervened quickly and tightly regulated the railroad industry in the benefit of residents. Despite the popularity of alternate forms of transportation, such as vehicles and commercial planes, the strict restrictions remained in place until the mid-1950s (Gómez-Ibáñez, J. A., & de Rus, 2006).

Deregulation of the Railroad Industry

An interstate highway was also developed at around this time adversely affecting a struggling railroad industry from heavy regulation. It was not until the 1970s when the sixth largest company in the country collapsed – Penn Central railroad – that the government decided to deregulate the railroads so that it could compete with other modes of transport (Gómez-Ibáñez, J. A., & de Rus, 2006).

Support for Deregulation

I agree with the move to deregulate the railroad industry. During the late 19th century when the railroad industry was first regulated, the government did so with the sole aim of restricting the railroad industry from exercising monopoly in the transport industry (Gómez-Ibáñez, J. A., & de Rus, 2006). However, by the 1980s when the deregulation of railroads took effect, the transport industry had changed immensely with automobiles and aviation industries becoming key players (Gómez-Ibáñez, J. A., & de Rus, 2006). Therefore, deregulating the railroad industry was called for, allowing the railroad industry to compete with other players in the transport industry. Deregulating the railroads allows train owners to easily adjust their prices and nature of services so that they can compete effectively with the automobiles and aviation industries. This gives the railroads a sustainable competitive advantage even in the long term.


Gómez-Ibáñez, J. A., & de Rus, G. (Eds.). (2006). Competition in the railway industry: An

international comparative analysis. Edward Elgar Publishing.

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