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Water To Railroad Transportation Case Study

200 Words1 Pages
The massive switch from water to railroad transportation in the end of the 19th century suggests that the shipping cost differential was significant, despite the lower freight rates generally observed for water transportation, when compared to railroads.
Fogel calculates the social savings of the interregional shipping from primary to secondary markets considering the cases with and without the presence of railroads. The social savings would represent the opportunity cost of the alternative shipping.
Fogel claims that if only freight rates and ton-miles were being considered for the calculation, the social savings from the railroads would be actually negative. However, using this method, many aspects of the costs of water transportation have
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