Lecture04Cup

Lecture04Cup - Regulatory Responses to “the Trust Problem” Cooperation Competition and the Struggle over Antitrust Legislation in the U.S

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Regulatory Responses to “the Trust Problem” Cooperation, Competition, and the Struggle over Antitrust Legislation in the U.S., 1880-1914 (PART II) Combinations Combinations in Restraint of Trade in Restraint of Trade • Reference to horizontal combinations – Voluntary agreements among natural competitors to stop competing • Abide by common schedule of – Prices – Output levels – Market shares – Pools, cartels, trusts as examples of combinations in restraint of trade Different forms of Horizontal Different forms of Horizontal Combination Combination • Cartels and RR pools—the loosest form of combination – Both ownership and day-to-day management of individual property units are decentralized • Rational reorganization of productive enterprise difficult • Defection easy (esp. likely when business times get bad)-- Restrict Output-- Restrict Output-- Raise Prices-- Raise Prices-- Stabilize Prices-- Stabilize Prices STEEL CARTEL STEEL CARTEL-- Restrict Output-- Restrict Output-- Raise Prices-- Raise Prices-- Stabilize Prices-- Stabilize Prices STEEL CARTEL STEEL CARTEL Efficient Efficient Producers Producers Inefficient Inefficient Producers Producers-- Restrict Output-- Restrict Output-- Raise Prices-- Raise Prices-- Stabilize Prices-- Stabilize Prices STEEL CARTEL STEEL CARTEL Efficient Efficient Producers Producers Inefficient Inefficient Producers Producers Defect Defect Different forms of Horizontal Different forms of Horizontal Combination Combination • Trusts and Holding Companies—a tighter form of combination – Ownership remains decentralized, but day-to-day management transferred to central director • In exchange, owners received certificates entitling them to some share of aggregate profits.-- Restrict Output-- Restrict Output-- Raise Prices-- Raise Prices-- Stabilize Prices-- Stabilize Prices STEEL TRUST STEEL TRUST-- Restrict Output-- Restrict Output-- Raise Prices-- Raise Prices-- Stabilize Prices-- Stabilize Prices STEEL TRUST STEEL TRUST Efficient Efficient Producers Producers Inefficient Inefficient Producers Producers Different forms of Horizontal Different forms of Horizontal Combination Combination • Merger—Tightest form of combination – Ownership and management concentrated • In many instances, beyond the reach of the law to regulate. – Rights of property Combinations Combinations in Restraint of Trade in Restraint of Trade • Combinations in restraint of trade apply to looser forms of combination – Broadly tolerated by common law courts – Horizontal arrangements to restrict competition a part of a citizen’s right of voluntary association • Public welfare not compromised as long as – Potential competitors free to enter the market – Members of combine are free to exit – Not survival goods (“necessaries of life”) Horizontal Combination of Watch Makers Voluntary Arrangement to Restrain Voluntary Arrangement to Restrain Competition b/w Natural Competition b/w Natural Competitors Competitors Example Example : Price-Fixing Combination : Price-Fixing Combination Horizontal Combination...
View Full Document

This note was uploaded on 04/02/2008 for the course POL SCI 147C taught by Professor James during the Winter '08 term at UCLA.

Page1 / 69

Lecture04Cup - Regulatory Responses to “the Trust Problem” Cooperation Competition and the Struggle over Antitrust Legislation in the U.S

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online