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Friday, August 12, 2005

From the August 12, 1905 New York Times

I am going to start reading the NYT from 100 years ago to the day. I reported a bit about today's front page over at Division of Labour, but here was an interesting tidbit on Page 4:
It was shown in the argument before the Interstate Commerce Commissionj by the attorneys of the Gulf Refingin Comany that the rate northward on Texas oil from New Orleans to Chicago was 41 cents per 100 pounds, and the rate southward but 23. The rate from New Orleans to Cincinnati was 39 cents and southward 22. From New Orleans to St. Louis, Louisville northward was 35 cents and southward 18.

Where was Standard Oil's production facilities at the time? Mainly in the Ohio and Pennsylvania area. Upshot? The claim was that Standard Oil was able to receive the lower price of transportation that allowed it to enter the southern market for petroleum products while southern oil producers couldn't access the northern market at the same price.

Interesting example for in-class discussion about price discrimination and its effects on the market.

Comments:
I don't think this is price discrimination. The price for going up river is greater because you are going against the current.
 
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