The Market that Antitrust Built: Public Policy, Private Coercion, and Railroad Acquisitions, 1825 to 1922
Posted by Social Science Research Network
The Market that Antitrust Built: Public Policy, Private Coercion, and Railroad Acquisitions, 1825 to 1922 – Frank Dobbin (Harvard University – Department of Sociology) and Timothy J. Dowd (Emory University – Department of Sociology)
ABSTRACT: How do new business models emerge? Neoinstitltionalists argue that the process often begins when a policy shift undermines the status quo; groups then vie to define the best alternative. The authors explore the role of power in selecting between two alternative business models available to railroads from 1897, when antitrust laws banned the cartel the prevailing model for managing competition. Predatory railroads prescribed several methods for destroying rivals. Financiers prescribed amicable mergers instead, and fought predation by threatening to withhold capital from predators. An analysis of the 167 rail acquisitions in Massachusetts between 1825 and 1922 confirms that the financiers succeeded. After antitrust laws were enforced, railroads left cartels to follow the business model of financiers rather than that of predators. This can be seen in the conditional variables that predict buying and selling. Thus public policy and power can shape key market features. It is ironic that this market, built by antitrust, became the prototype for the neoliberal ideal of the unregulated economy.
Featured News
Redfin Settles $9.2M Commission Inflation Lawsuits
May 7, 2024 by
CPI
DOJ Supports Colorado’s Efforts to Block Kroger-Albertsons Merger
May 7, 2024 by
CPI
Japan Considers Regulation of AI Developers
May 7, 2024 by
CPI
European Commission Extends Decision Deadline for Ita-Lufthansa Merger
May 7, 2024 by
CPI
UK, US and Australia Sanction Senior Leader of LockBit Cybercrime Gang
May 7, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI