In Defense of the Long-Haul/Short-Haul Discrimination
Volume: Volume 10, No. 2
Issue: Autumn 1979
Pages: pp. 706-708
Authors: David D. Friedman
Title: In Defense of the Long-Haul/Short-Haul Discrimination
Abstract: Discriminatory pricing by railroads may be better than marginal cost pricing with a subsidy of the resulting losses, since it gives the railroad correct incentives for deciding what rail lines to build. The argument, applied to long-haul/short-haul discrimination, shows that its prohibition may lead to nonoptimal construction decisions.
JEL Classification
Economics of Transportation (6150)