Abstract
Although the contribution of railroad investment to Canadian economic development has been extensively analysed, the consequences of the freight rate structure have not been examined. This paper is concerned with how various pricing policies affect land-use patterns, agricultural supply, and welfare. It is shown that the Crow's Nest Agreement left freight rates 44 per cent, and a (counterfactual) monopoly rate 70 per cent above marginal cost. The model and data imply reductions in supply and land use of 32 per cent and 50 per cent for these two pricing scenarios, respectively. A new figure for aggregate prairie land rent in 1901 is calculated also.
Published Version
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