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History of Transportation

Theoretically, antitrust laws are designed not so much as a punishment for large corporations as they are to promote competition. The changing nature of these laws reflects a perpetual swing between the sometimes competing forces of corporate profitability and consumer benefit (Coyle, Bardi, Novack, 2004). A healthy competitive business environment is the balance point that benefits both sides. As economies change, increased antitrust enforcement often goes hand in hand with increased overall regulation.

Conversely, less enforcement is often part of less regulation as a whole. The early railroads were highly profitable industries. The nature of the business and the lax regulatory scheme allowed for a few large companies to dominate the market. The Panic of 1873 and the following railroad strikes dented the profitability of rail lines. This handful of carriers still managed to keep a stranglehold on rates and market share. Sensing possible government intervention, the railroads made several attempts at self-regulation.

Ultimately, these attempts failed because of cheating and lack of cooperation (Coyle, Bardi, Novack, 2004). Government intervened as “trust-busters. ” This intervention triggered an ongoing trend of increased government regulation. The Sherman Antitrust Act of 1890 triggered increased scrutiny of the transportation industry. A similar process occurred later in the airline industry. In both cases regulation eventually became so severe as to threaten the survival of the industry.

In the future, the challenge for the transportation industry will be to find a way to effectively self-regulate. For the government the challenge will be to find a way to enforce antitrust regulations while resisting the urge to become overly involved. Antitrust laws serve important roles in regulated and unregulated environments. In unregulated eras, in particular, they serve as a hedge against corporate domination of a sector, region or society. At the same time, if they are not enforced intelligently and carefully they can hurt the very people they are designed to protect.

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