In the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, a paper railroad is a company

Company

A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...

 in the railroad

Rail transport

Rail transport is a means of conveyance of passengers and goods by way of wheeled vehicles running on rail tracks. In contrast to road transport, where vehicles merely run on a prepared surface, rail vehicles are also directionally guided by the tracks they run on...

 business which exists "on paper only": as a legal entity which does not own any track

Rail tracks

The track on a railway or railroad, also known as the permanent way, is the structure consisting of the rails, fasteners, sleepers and ballast , plus the underlying subgrade...

, locomotives, or rolling stock

Rolling stock

Rolling stock comprises all the vehicles that move on a railway. It usually includes both powered and unpowered vehicles, for example locomotives, railroad cars, coaches and wagons...

. Frequently, paper railroads were set up as subsidiaries

Subsidiary

A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...

by larger parent railroads, or formerly existed and operated under their old name but were subsumed when one or more smaller railroads merged. Paper railroads were also known as non-operating subsidiary railroads of the parent railroad. In many cases, paper railroads were still known as such even after plans to build them may have been canceled.