Final answer:
Railroad companies used predatory and monopolistic practices to eliminate competition, such as overpricing, collusion, and differential shipping rates. The government implemented laws to regulate these practices and promote fair competition.
Step-by-step explanation:
The primary strategy that railroad companies used to eliminate competition was through predatory and monopolistic practices. They engaged in practices such as overpricing, collusion, and differential shipping rates to gain a competitive advantage and drive out smaller competitors.
For example, during the construction of the first transcontinental railroad, Crédit Mobilier overpriced the cost of laying down track and paid off government officials to keep quiet. Additionally, companies like Standard Oil, owned by Rockefeller, obtained discounted freight rates from railroad companies, gathered information on competitors, and drove them out of business through aggressive mergers and acquisitions.
To curb these anti-competitive practices, the government passed laws like the Interstate Commerce Act in 1887, which established standardized rates and created the Interstate Commerce Commission to regulate railroad business practices.