UPSP

The Nash equilibrium market power ratios of BNSF and UPSP increase after the mergers; however, the percentage increases are only 1.6% for the BNSF and 8.4% for UPSP.

The net revenue of BNSF increases 24.5% from $14.70 per 1000 bushels (No Mergers) to $18.30 (Mergers) while the net revenue of UPSP expands from $10.70 per 1000 bushels (No Mergers) to $16.40 (Mergers), a 53.3% increase.

The BN-SF and UP-SP mergers produce virtually no change in Nash equilibrium revenue/ variable cost ratios for CKR and KSW railroads and only a 1.9% increase for BNSF and UPSP. This outcome may be due to the fact that this region is relatively close to the terminals in Salina, Wichita, and Hutchinson, Kansas, and therefore railroad market power is constrained not only by intrarailroad competition but also by strong intermodal competition from trucks, which have a cost advantage relative to railroads for short hauls.

The mergers resulted in a 52% decline in net revenue of UPSP in subregion 1, a 1.9% decrease in subregion 2, a 53.3% increase in subregion 4, and a sixfold increase in subregion 3.