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Spatial Competition, Strategic Entry Responses, and the North Dakota Railroad War of 1905

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  • Chad Syverson

Abstract

The North Dakota Railroad War of 1905, which pitted a potential entrant (the Soo Line) against an established monopolist incumbent (the Great Northern Railway), offers a lucid empirical example of strategic behavior, and in particular the potential for entry deterrence through product proliferation. I use detailed geographic data and historical records to examine the profitability of both the incumbent’s and entrant’s potential and chosen strategies. I find that the incumbent could have likely profitably deterred entry. It did not, however, waiting instead to respond only once the entrant began building. This simultaneous entry arguably led to over expansion in the market. I investigate whether the chosen strategies may have ultimately ended up being both unprofitable for the firms involved as well as, potentially, socially wasteful.

Suggested Citation

  • Chad Syverson, 2024. "Spatial Competition, Strategic Entry Responses, and the North Dakota Railroad War of 1905," NBER Working Papers 32549, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32549
    Note: DAE IO
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    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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