Government Intervention?

The government has been heavily involved with the railway industry from its creation. But why?

Government becomes involved with a company that is vital to the nations success, and the railway is a very important part of any nation. Therefore it makes sense that the government would do all it can to ensure it stays afloat.

Yet, I have also stated earlier that governments do not like monopolies or oligopolies. Therefore, wouldn’t this make the railway an externality? A negative one? But also a positive externality? So does the government have to regulate and subsidize this industry?

Yup. They do.

Quite simply, governments are so involved because they not only have to keep this industry functioning but also have to make sure it’s running fairly and effectively. The government is trying to please the people that have voted them into power, therefore, it’s logical to understand there rationale for them wanting to keep this industry close to ensure is pleasing the consumers.

Granted of course, that companies do not really appreciate the government controlling their industry. The railway is proof of that, and in Canada, the CPR tries to find freedom from the government (the CNR really can’t seeing they are a government owned company).