Investment in the American Railroad System As an investor, risk is always associated with becoming involved in new industries. This essay will analyze investing in the railroad industry of the United States during the 1800’s. Furthermore, it will consider the benefit of investing before and after demand for railroad transportation. As background, transportation was being expanded through building canals and revolutionizing land transport as well through innovating powerful engines during this era. As an investor, it would be necessary to consider which forms of transportation possess competitive advantages in the shipping process and other potential advantages that would lead to success. As demonstrated by the Erie Canal’s success, driving demand appeared to be based on reducing shipping time and correspondingly, shipping costs.
The primary benefit of investing ahead of demand is creating a first mover advantage in a new industry. Though there is a substantial risk …show more content…
In the worst case scenario, developing the railroads could be massively more expensive than projected as a result of landscaping and engineering costs. If these costs were passed onto consumers, then demand may not grow due to overpricing compared to alternative shipping services. In the best case scenario, the railroad’s cost of shipping and shipping time may outdo previous forms of transportation, meanwhile reaching new territories as westward expansion was occurring. As an investor, appealing to new territories and forming transportation to bridge regions spanning the east and west would likely be the most attractive aspects. Building transportation in new territories would serve as an untapped, and worthwhile market where demand could be
The primary benefit of investing ahead of demand is creating a first mover advantage in a new industry. Though there is a substantial risk …show more content…
In the worst case scenario, developing the railroads could be massively more expensive than projected as a result of landscaping and engineering costs. If these costs were passed onto consumers, then demand may not grow due to overpricing compared to alternative shipping services. In the best case scenario, the railroad’s cost of shipping and shipping time may outdo previous forms of transportation, meanwhile reaching new territories as westward expansion was occurring. As an investor, appealing to new territories and forming transportation to bridge regions spanning the east and west would likely be the most attractive aspects. Building transportation in new territories would serve as an untapped, and worthwhile market where demand could be