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No Place For Law and Economics: The Controversy over Railroad Regulation before the Hepburn Act

Research in the History of Economic Thought and Methodology

ISBN: 978-1-78560-960-2, eISBN: 978-1-78560-959-6

Publication date: 23 July 2016

Abstract

At the turn of the 20th-century railroad regulation was hotly debated in the United States. Railways were accused of abusing of their monopolistic position, in particular by discriminating rates. Public opinion’s pressure for tighter regulation led to the 1906 enactment of the Hepburn Act, which strengthened the powers of the Interstate Commerce Commission. American economists actively participated in the debate. While most of them sided with the pro-regulation camp, the best economic analysis came from those who used the logic of modern law and economics to demonstrate how most railroads’ practices, including rate discrimination, were simply rational, pro-efficiency behavior. However, as relatively unknown Chicago University economist Hugo R. Meyer would discover, proposing that logic in public events could at that time cost you your academic career.

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Acknowledgements

Acknowledgments

I thank Andreaa Cosnita Langlais, Tom Firey, Paul Moreno, Russell Pitman, Peter van Doren, and this journal’s editors and referees for their useful comments and suggestions. I also thank Simon Cook for his invaluable help in revising my English. I am of course responsible of all remaining mistakes. A shorter version of this work has been published as Giocoli (2015–2016). The financial support of the INET – Institute for New Economic Thinking grant “Free from what? Evolving notions of ‘market freedom’ in the history and contemporary practice of US antitrust law and economics” (grant # INO1200015/033) is gratefully acknowledged.

Citation

Giocoli, N. (2016), "No Place For Law and Economics: The Controversy over Railroad Regulation before the Hepburn Act", Research in the History of Economic Thought and Methodology (Research in the History of Economic Thought and Methodology, Vol. 34A), Emerald Group Publishing Limited, Leeds, pp. 293-338. https://doi.org/10.1108/S0743-41542016000034A009

Publisher

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Emerald Group Publishing Limited