Federal Preemption and Competition in the Post 1866 United States Telegraph Market

41 Pages Posted: 24 Sep 2014 Last revised: 18 Aug 2018

Date Written: June 23, 2016


The United States federal government preempted anti-competitive state and municipal telegraph regulations when the 1866 Post Roads Act was enacted. The act granted a de facto national franchise to build and operate a telegraph system anywhere in the United States to any telegraph company organized within any state. The act also outlawed certain types of contracts that had prohibited other companies from acquiring telegraph right of way access. Rival companies took advantage of the dismantling of local entry barriers to enter the telegraph market and compete with Western Union. I present the first empirical evidence indicating the post-1866 United States telegraph market was contested. The evidence is consistent with the theory that the 1866 Post Roads Act contributed to increasing contestability and consumer welfare.

Keywords: Telegraph, Telecommunication, Regulated Industries, Contestable Markets, Federalism, Competition, Antimonopoly, Preemption, Entry, Deregulation, Regulation, Economic History

JEL Classification: H11, H77, K21, K23, L13, L43, L96, L98, N41, O25

Suggested Citation

Honsowetz, Aaron, Federal Preemption and Competition in the Post 1866 United States Telegraph Market (June 23, 2016). Available at SSRN: https://ssrn.com/abstract=2499856 or http://dx.doi.org/10.2139/ssrn.2499856

Aaron Honsowetz (Contact Author)

Bethany College ( email )

Bethany, WV 26032
United States

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