Commodity Market Dynamics and the Joint Executive Committee (1880-1886)

Mariuzzo, Franco ORCID: and Walsh, P.P. (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

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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 com- modity market dynamics into Porter’s (1983) structural modeling of the Joint Executive Committee Railroad Cartel. As in Porter, we model mar- ginal cost as a parametric function of (instrumented) output, among other factors. Unlike Porter, we model pricing over marginal cost as a nonparamet- ric 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 collu- sive 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
Depositing User: Julie Frith
Date Deposited: 16 Nov 2012 12:57
Last Modified: 14 May 2023 23:50

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