Competition, regulation and nationalization: The Prussian railway system in the nineteenth century

Abstract

From the 1830s until the 1870s the Prussian railway system became increasingly dense. As density increased, competition among lines became more intense and the making of a reasonable rate of return became more difficult. To overcome these problems the railways merged to form monopolies or entered into collusions. In the late 1870s in order to solve these problems of monopoly and collusion the Pruss ian government nationalized the railways. The authors contend that this nationalization was more than was necessary for finding a solution to the problems: a policy of competition on the track forcing track owners to accept the trains of any who applied to run over those tracks would have been much better.