Commodity market dynamics and the Joint Executive Committee (1880-1886)

Mariuzzo, Franco ORCID: and Walsh, Patrick Paul (2013) Commodity market dynamics and the Joint Executive Committee (1880-1886). The Review of Economics and Statistics, 95 (5). pp. 1722-1739. ISSN 1530-9142

[thumbnail of Mariuzzo_Walsh_2013_RES]
PDF (Mariuzzo_Walsh_2013_RES) - Published Version
Download (569kB) | Preview


Using weekly spot and future commodity prices in Chicago and New York, we construct expected transportation rates for grain between these two cities, expected inventory levels in New York, and realized errors in the expectations of such variables. We incorporate these exogenous commodity market dynamics into Porter’s (1983) structural modeling of the Joint Executive Committee Railroad Cartel. As in Porter, we model marginal cost as a parametric function of (instrumented) output, among other factors. Unlike Porter, we model pricing over marginal cost as a nonparametric function of a set of variables, which include expectations of deterministic demand cycles and cartel stability. We estimate the pricing and demand equation simultaneously and semiparametrically. Our estimated weekly markups during periods of cartel stability are shown to reflect optimal collusive pricing over deterministic business cycles, as modeled in Haltiwanger and Harrington (1991). Periods of cartel instability are proven to be triggered by realized mistakes in expectations of New York grain prices.

Item Type: Article
Additional Information: © 2012 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology. Published under a Creative Commons Attribution = NonCommercial 3.0 Unported (CC BY = NC 3.0) License
Uncontrolled Keywords: sdg 11 - sustainable cities and communities ,/dk/atira/pure/sustainabledevelopmentgoals/sustainable_cities_and_communities
Faculty \ School: Faculty of Social Sciences > School of Economics
UEA Research Groups: Faculty of Social Sciences > Research Groups > Industrial Economics
Faculty of Social Sciences > Research Centres > Centre for Competition Policy
Depositing User: Julie Frith
Date Deposited: 16 Nov 2012 12:57
Last Modified: 04 Mar 2024 16:36
DOI: 10.1162/REST_a_00320


Downloads per month over past year

Actions (login required)

View Item View Item