Essays on Railroads and Industrial Organization

Abstract

In this dissertation, I develop and leverage structural industrial organization tools to analyze and address complex issues in two distinct sectors. Initially, I focus on the freight rail industry in the United States. The first chapter introduces a new methodology to estimate the cost structure of railroads using firm choices, the network structure of production, and publicly available routing data. I find a U-shaped cost-utilization relationship, which helps explain significant increases in rail transportation costs in the last 20 years. In the second chapter, I apply this methodology to address policy-oriented questions within the rail industry: I assess the externalities generated by infrastructure investments, the potential cost efficiencies of a major merger, and the effect of the China shock on freight costs. My findings underline significant externalities and geographic variations in economic impacts. In the third chapter, I explore the car market in Argentina. I evaluate an unusual financial instrument to purchase cars, aimed at those usually excluded from formal banking. By modeling the dual role of cars as both a financial asset and a durable good, I show how researchers should account for this instrument when studying the Argentinean market, as well as underline the role it plays in improving financial inclusion in an environment of high inflation and restrictive economic policies.