Describe Ida Tarbell’s criticisms of Standard Oil, and explain the cliometric research on the use of predatory pricing by Rockefeller. (See Economic Insight 17.2.) Why were the owners of firms acquired by Rockefeller often glad to sell their firms to him? The firms were often glad to sell because they were struggling firms dealing with excess capacity and falling prices. Rockefeller was actually able to pay firms more than they were worth on paper in terms of what they were producing at that point, because in the long run he planned to shut them down as a means of controlling the market and making large profits. Therefore, the firms were worth more to Rockefeller than their market value. What is a vertical merger (forward & backward)? Provide examples from the late-19th century of each type of vertical merger. A vertical merger is one that combines firms that formerly bought from or sold to each other, thus combining the stages of production process into a single firm. A forward vertical merger is when a producer
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This note was uploaded on 09/13/2011 for the course ECON 2200 taught by Professor Moore during the Fall '07 term at UGA.