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Murphy - BTW, you said something to the effect that BNSF's rates in Montana are set by the competition. Look again. There is no competition for hauling grain out of Montana. The nearest waterway is 500 miles to the west. The CP is hundreds of miles up north in a different country. The UP line into Montana is so convaluted and roundabout that UP really cannot put up any competition. That's why BNSF's rates, even by BNSF's own admission, are monopolistic rates, where the price set is equal to the "deadweight loss" between demand and where marginal costs equal marginal revenue for a given quantity. If true competition were introduced, price would be set more toward that point where demand equals marginal costs, as competition causes price taking. If you think BNSF is low-balling itself, look at the differential between what Montana farmers are charged and what Nebraska farmers are charged for the same relative costs to the railroad. (See the thread on Montana grain pricing for reference). <br /> <br />If you want, you can say that maybe conservation set-asides are the competition for BNSF in Montana, as farmers find it's less expensive to set land aside rather than produce a crop wherein the transporter gets half the proceeds from the sale.
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