Terminal Railroad Research Articles

The “Rule of Reason” and an Unnatural Monopoly: United States V. Terminal Railroad

The Sherman Act (1890) inaugurated the commitment of the American federal government to block the horizontal combinations or “trusts” then beginning to dominate many industries. But the statute’s sweeping language nearly demanded interpretation by the executive branch and the judiciary. Two decisions by the U.S. Supreme Court in 1911, Standard Oil and American Tobacco, promulgated a “rule of reason” that sent American antitrust law in a new direction, grounded in economic analysis. In its next antitrust case, the court used the rule to uphold a monopoly for the first time. To date, historians have overlooked that case, United States v. Terminal Railroad Association of St. Louis (1912). This article reviews the events that led to this prosecution under the Sherman At, and it explores a fallacy at the heart of the justices’ unanimous opinion. Contrary to their analysis, the Terminal Railroad of St. Louis lacked any legitimate claim to being a natural monopoly. In turn, their egregious misreading of fact and theory suggests that the justices were ill-equipped to wield economic analysis in shaping antitrust law.

Devising an automated technology to organize the railroad transportation of containers for intermodal deliveries based on the theory of point processes

A significant number of problems and associated additional expenses emerge for operators due to imperfections in the existing technology of operational planning of the functioning of railroad transport as a part of the intermodal transportation system. The source of problems is not only the process of transportation of containers by rail but also the processes that occur immediately before and after it. These processes are uncertain because of their probabilistic nature. Their random nature provokes additional idle time of rolling stock, causes additional operator expenses, and reduces the quality of customer service. However, the direct influence on them is very difficult or economically inexpedient.The study shows that taking into account the probabilistic nature of these processes to reduce their negative impact is most effective precisely at the stage of operational planning of the functioning of railroad enterprises involved in the intermodal transportation process. One should note that it is necessary to take into account random factors of processes of formation and processing of container trains at stations, their movement along sections and transfer to a port simultaneously in order to improve the quality of such planning. However, the arrival of containers at terminal railroad stations requires special attention.It has been proven that the key to the solution to the problem of synchronization of the processes is the formation of automated technology for the organization of the transportation of containers by railroad.We have formalized the technological process of formation and movement of container trains to seaports in the form of a model of stochastic optimization using a mathematical apparatus from the theory of point processes for this purpose. The optimization criterion for this model represents the operating expenses of an operator for the organization of the railroad part of intermodal transportation. The stochastic nature of the model gives a possibility to find the optimal parameters of the operational plan for the organization of container transportation while controlling a level of certainty in the possibility of implementation of the plan taking into account the probabilistic nature of the constituent processes.Based on the developed model, software was created in the MATLAB programming environment and an automated technology for moving container trains was formed. The application of the proposed model in the formation of railroad container transportation technology could reduce operating expenses of a railroad part of intermodal container transportation by at least 10 %

Rethinking the Essential Facilities Doctrine for the EU Digital Economy

Although the essential facilities doctrine has not been applied recently anymore in EU competition enforcement, it is regularly referred to in EU policy discussions as a tool to open up markets in which ‘tech giants’ act as gatekeepers to consumers. Considering that the digital economy is not anymore driven by physical infrastructures, such as the bridges in the US Terminal Railroad case from which the essential facilities doctrine originates, other assets like data or rankings as the backbone of many digital markets may form the subject of essential facilities claims. Access to data or being ranked by an online platform can now be essential for businesses to compete in the market. Against this background, the paper explores whether there should be more room for competition interventions under the essential facilities doctrine in the digital economy, considering market characteristics, as well as the recent Google competition cases seemingly bypassing the essential facilities doctrine, and legislative and policy developments regulating access outside EU competition law. It is put forward that the essential facilities doctrine should be rethought in order to be effectively applied in the EU digital economy, in particular by aligning its application with the underlying economic interests.

The Essential Facilities Doctrine: The Lost Message of Terminal Railroad

The growing importance of shared networks, shared platforms and shared standards leads to a renewed discussion of the essential facilities doctrine of antitrust. This is an area where European law and American law have diverged. In Trinko (2007), the U.S. Supreme Court came close to abolishing it. At the same time, it was reinvigorated by the European Commission, which asserted it successfully in E.C. v. Microsoft, and then, facing criticism, clarified the doctrine in a Guidance document. We harmonize the main cases around the doctrine’s original but often forgotten purpose namely, harvesting economic synergies through sharing. We argue that, absent such a doctrine, these synergies could be lost as firms either avoid sharing to avoid antitrust liability, or create sharing arrangements that undermine competition. We show how and why the original purpose of the doctrine has become entangled with other antitrust issues, in particular, leveraging. We systematize the sharing rules that have been imposed or allowed, with an emphasis on how to harvest synergies while mitigating any harm to competition.

The Essential-Facilities-Doctrine in the USA, EC and Switzerland with a Special Focus on FRAND

There have been many books, essays and decisions by courts about the Essential-Facilities-Doctrine, especially since the famous decision of US Supreme Court on United States v. Terminal Railroad Ass’s in 1912. In this paper I give an overview about the Essential-Facilities-Doctrine in the US, EC and Switzerland. In the first part I will explain the Essential-Facilities-Doctrine in general and point out some open and unsolved questions. In the second part selected leading cases in the US, EC and Switzerland will be presented. In part three, I will focus on the FRAND-Principle, which was a hot issue at the EU-Commission (e.g. Case of Qualcomm) and on Arbitration. The paper ends with a final conclusion and prospects.

Pricing Commuter, Intercity, and Freight Trains in a Terminal Railway Context: An Approach

The cost-of-service (or fully allocated cost) pricing model has been criticized in the economics literature. The criticisms generally focus on the issues of cross-subsidization problems from using average costs and economically inefficient pricing. A fully allocated cost model, applied to a terminal railroad setting, is presented that can substantively overcome these criticisms by using a resource consumption approach for key cost drivers. A successful implementation of a new cost recovery system in Toronto, Ontario, Canada, is used that applies these resource consumption concepts. A necessary precondition to this approach is the charting of the classes of traffic (commuter, intercity, and freight) into operated-track segmented paths, each of which consists of a set of one or more track links. Each traffic class path is characterized as either consisting of sole-use links, joint-use links, or a combination thereof. Operating and capital costs directly attributable to the track links are calculated. A reverse engineering work-effort-per-activity approach is used for assigning the total routine maintenance of way and maintenance of signals budget dollars to the terminal track links. The resource consumption approach provides a logical framework and analytical platform for analyzing link infrastructure complexity; system, path, and link capacity; path and link cost performance; and path and link renewal and replacement capital planning and capital sharing responsibility.

Terminal Railroad Revisited: Foreclosure of an Essential Facility or Simple Horizontal Monopoly?

Previous articleNext article No AccessTerminal Railroad Revisited: Foreclosure of an Essential Facility or Simple Horizontal Monopoly?David Reiffen, and Andrew N. KleitDavid Reiffen Search for more articles by this author , and Andrew N. Kleit Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by The Journal of Law and Economics Volume 33, Number 2Oct., 1990 Sponsored by The University of Chicago Booth School of Business and The University of Chicago Law School Article DOIhttps://doi.org/10.1086/467212 Views: 13Total views on this site Citations: 21Citations are reported from Crossref Copyright 1990 The University of ChicagoPDF download Crossref reports the following articles citing this article:Marissa Beck, Fiona Scott Morton Evaluating the Evidence on Vertical Mergers, Review of Industrial Organization 59, no.22 (Aug 2021): 273–302.https://doi.org/10.1007/s11151-021-09832-zThomas Nachbar Platform Effects, SSRN Electronic Journal (Jan 2021).https://doi.org/10.2139/ssrn.3775205Nikolas Guggenberger The Essential Facilities Doctrine in the Digital Economy: Dispelling Persistent Myths, SSRN Electronic Journal 13 (Jan 2021).https://doi.org/10.2139/ssrn.3802559Marissa Beck, Fiona M. Scott Morton Evaluating the Evidence on Vertical Mergers, SSRN Electronic Journal 14 (Jan 2020).https://doi.org/10.2139/ssrn.3554073Catherine Tucker Digital Data, Platforms and the Usual [Antitrust] Suspects: Network Effects, Switching Costs, Essential Facility, Review of Industrial Organization 54, no.44 (Feb 2019): 683–694.https://doi.org/10.1007/s11151-019-09693-7Catherine E. Tucker Digital Data, Platforms and the Usual [Antitrust] Suspects: Network Effects, Switching Costs, Essential Facility, SSRN Electronic Journal (Jan 2019).https://doi.org/10.2139/ssrn.3326385Albert J. Churella Delivery to the Customer's Door: Efficiency, Regulatory Policy, and Integrated Rail-Truck Operations, 1900–1938, Enterprise & Society 10, no.11 (Feb 2015): 98–136.https://doi.org/10.1017/S1467222700007862Albert J. Churella Delivery to the Customer's Door: Efficiency, Regulatory Policy, and Integrated Rail-Truck Operations, 1900–1938, Enterprise and Society 10, no.11 (Feb 2015): 98–136.https://doi.org/10.1093/es/khn105Francine Lafontaine, Margaret Slade Vertical Integration and Firm Boundaries: The Evidence, Journal of Economic Literature 45, no.33 (Jul 2007): 629–685.https://doi.org/10.1257/jel.45.3.629Anne Gabelmann, Wolfgang Groß Telekommunikation: Wettbewerb in einem dynamischen Markt, (Jan 2003): 85–130.https://doi.org/10.1007/978-3-642-57341-5_6Stephen F. Ross, Stefan Szymanski The Law & Economics of Optimal Sports League Design, SSRN Electronic Journal (Jan 2003).https://doi.org/10.2139/ssrn.452861Felipe Balmaceda, Eduardo H Saavedra Vertical Integration and Shared Facilities in Unregulated Industries, SSRN Electronic Journal (Jan 2003).https://doi.org/10.2139/ssrn.585424Anne Gabelmann, Wolfgang Gross Telekommunikation: Wettbewerb in einem dynamischen Markt, (Jan 2000): 83–123.https://doi.org/10.1007/978-3-662-00770-9_5Lawrence J. White U.S. Public Policy toward Network Industries, SSRN Electronic Journal (Jan 1999).https://doi.org/10.2139/ssrn.164500Nicholas Economides, Lawrence J. White One-Way Networks, Two-Way Networks, Compatibility, and Public Policy, (Jan 1998): 9–29.https://doi.org/10.1007/978-1-4615-5483-7_2Richard J. Gilbert, Carl Shapiro An economic analysis of unilateral refusals to license intellectual property, Proceedings of the National Academy of Sciences 93, no.2323 (Nov 1996): 12749–12755.https://doi.org/10.1073/pnas.93.23.12749David A. Butz Most-Favored Treatment Provisions as Nondiscrimination Guarantees, International Journal of the Economics of Business 2, no.11 (May 2011): 65–86.https://doi.org/10.1080/758521097Nicholas Economides, Lawrence J. White Networks and compatibility: Implications for antitrust, European Economic Review 38, no.3-43-4 (Apr 1994): 651–662.https://doi.org/10.1016/0014-2921(94)90100-7Gregory T. Gundlach, Paul N. Bloom The “Essential Facility” Doctrine: Legal Limits and Antitrust Considerations, Journal of Public Policy & Marketing 12, no.22 (Dec 2018): 156–169.https://doi.org/10.1177/074391569101200202 George Bittlingmayer The Stock Market and Early Antitrust Enforcement, The Journal of Law and Economics 36, no.1, Part 11, Part 1 (Oct 2015): 1–32.https://doi.org/10.1086/467263 Timothy J. Brennan Refusing to Cooperate with Competitors: A Theory of Boycotts, The Journal of Law and Economics 35, no.22 (Oct 2015): 247–264.https://doi.org/10.1086/467253

Vertical Restraints as Contract Enforcement Mechanisms

IT is now generally recognized that there are many cases of vertical restraints that do not fit the standard "consumer free riding on special services" theory.1 For example, the widespread use of resale price maintenance in the marketing of brand name clothing cannot be explained as inducing retailers to supply services such as dressing rooms. It is unlikely that consumers must be prevented from trying on clothing free of charge at a full-service retailer before purchasing the clothing at a discount from retailers who do not supply dressing rooms. A number of authors recently have attempted to correct this deficiency in the standard theory by expanding the type of services that vertical restraints may induce retailers to supply and the corresponding retailer free-riding problems.2 The standard economic analysis of how vertical restraints operate to induce desired retailer behavior has remained essentially unchanged, however. The standard analysis assumes that when it is not feasible for a manufacturer to write explicit, court-enforceable contracts with retailers for the supply of particular services, the only alternative mechanism manufacturers can use to induce the supply of desired services is to increase the direct return retailers receive from consumers when those

The Philadelphia and Reading Terminal Railroad and Station in Philadelphia

Progress in this country is evidenced in no way more conclusively than in the growth of railways. With their great development, their consolidation into grand trunk lines, the concentration of traffic, and the expansion of suburban travel, the necessity bas arisen in cities of the first class for great terminal railway stations in central locations, provided with all the improvements, accommodations and facilities for rapid and effective train service which modern ingenuity can devise. It is believed that an account of the construction of one of these great terminals from its inception to its completion will be of considerable interest to the profession, and it is with this object that the present paper has been prepared.