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The Canadian Pacific -- Kansas City Southern Railway Merger and the Optimal Railroad Network

Author

Listed:
  • Yanyou Chen

    (University of Toronto, Department of Economics, Max Gluskin House, 150 St. George Street, 310, Toronto, ON, Canada, M5S 2E9)

Abstract

This project evaluates the optimal transport network in North America by first analyzing the proposed $25 billion merger between the Canadian Pacific Railway and the Kansas City Southern Railway. Then this project studies different sequences of mergers and find the optimal path of mergers to form the transport network in North America. Current simulation results suggest that average over all origin-destination markets, the proposed merger between Canadian Pacific Railway and the Kansas City Southern Railway will decrease the average shipment cost by 6.27%. Among different local markets, regions near or utilize the route from Des Moines, IA -- Kansas City, MO -- Joplin, MO will have the largest efficiency gain from the proposed merger.

Suggested Citation

  • Yanyou Chen, 2021. "The Canadian Pacific -- Kansas City Southern Railway Merger and the Optimal Railroad Network," Working Papers 21-12, NET Institute.
    • Handle: RePEc:net:wpaper:2112
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    File URL: http://www.netinst.org/Chen_21-12.pdf
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    More about this item

    Keywords

    Merger; Transport Network; Railroad;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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