Market Dominance: How Firms Gain, Hold, or Lose It and the Impact on Economic Performance

By David I. Rosenbaum | Go to book overview

blossoming market segment after 1900. This combination of factors played a very significant role in Standard's loss of market share.

The government's successful prosecution of Standard Oil under the Sherman Act was also very important in whittling the firm down to size. Standard's share of refining only dropped 6 percent between 1906 and 1911, and this was a time when entrants had supposedly gained a significant foothold. Granted, Standard's refining share of 64 percent in 1911 was "low," but no other firm was remotely close to that number. When Standard's presence in wholesale marketing and pipeline transportation were factored in, it was still the dominant firm at the time of the break up.

In the case of Standard Oil, the market worked very slowly to erode its position of dominance and Standard used all the weapons available to it to maintain its position. Public policy, via the government's successful prosecution of the antitrust case against Standard Oil, created 20 firms where there had been one. The newly orphaned subsidiaries of the former Standard Oil of New Jersey were now more vulnerable to the market pressures that competition could generate and the U.S. petroleum industry would never again see the likes of Standard Oil of New Jersey.


NOTES
1.
See, for example, Dominick T. Armentano, Antitrust and Monopoly: Anatomy of a Policy Failure ( New York: John Wiley and Sons, 1982); Robert H. Bork, The Antitrust Paradox: A Policy at War with Itself( New York: Basic Books, 1978); Bruce Bringhurst, Antitrust and the Oil Monopoly: The Standard Oil Cases, 1890-1911 (Westport, CT: Greenwood Press, 1979); Wayne A. Leeman, "The Limitations of Local Price Cutting as a Barrier to Entry", Journal of Political Economy 64 ( 1956): 329-334; Randall Mariger, "Predatory Price Cutting: The Standard Oil of New Jersey Case Revisited", Explorations in Economic History 15 ( 1978): 341-367; Alfred Marshall, Industry and Trade, 4th ed., ( London: Macmillan, 1923); John S. McGee, "Predatory Price Cutting: The Standard Oil (N.J.) Case", Journal of Law and Economics 1 ( 1958): 137-169; Richard A. Posner, Antitrust Law: An Economic Perspective ( Chicago: University of Chicago Press, 1976); and F. M. Scherer and David Ross, Industrial Market Structure and Economic Performance, 3 ed. ( Boston: Houghton Mifflin, 1990).
2.
Standard Oil Company of New Jersey v United States, 31 Sup. Ct. 502 ( 1911), p. 509.
3.
31 Sup. Ct. 504.
4.
Ralph W. Hidy and Muriel E. Hidy, Pioneering in Big Business, 1882-1911 ( New York: Harper and Brothers, 1955), p. 13.
7.
Harold F. Williamson and Arnold R. Daum, The American Petroleum Industry: Volume I, The Age of Illumination, 1859-1899 (Evanston, IL.: Northwestern University Press, 1959), p. 308.
8.
United States v Standard Oil Company of New Jersey, 173 Fed. 177. In the Circuit Court of the United States for the Eastern Division of the Eastern Judicial District of Missouri ( 1909), Brief of Facts and Argument for Petitioner, vol. 1 ( Washington, D.C.: U.S. Government Printing Office, 1909), p. 3.

-33-

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Market Dominance: How Firms Gain, Hold, or Lose It and the Impact on Economic Performance
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Illustrations vii
  • 1 - Introduction 1
  • Notes 9
  • 2 - Dominance in the Oil Industry: Standard Oil from 1865 to 1911 11
  • Notes 33
  • 3 - Tobacco: Predation and Persistent Market Power 39
  • Notes 51
  • 4 - Alcoa and the U.S. Aluminum Industry 55
  • Notes 66
  • 5 - Dow Chemical and the Magnesium Industry 69
  • Notes 86
  • 6 - Eastman Kodak in the Photographic Film Industry: Picture Imperfect? 89
  • Notes 107
  • 7 - The Rise and Fall of Ford and General Motors in the U.S. Automobile Industry: A Tale Twice Told 109
  • Notes 126
  • 8 - The Rise and Fall of IBM 131
  • Notes 150
  • 9 - Microsoft 153
  • Notes 172
  • 10 - Blue Cross: Health Insurance 175
  • Notes 190
  • 11 - AT&T's Grand Design for Dominance in the Global Information Age 195
  • Notes 224
  • 12 - Conclusion 227
  • Notes 254
  • Bibliography 257
  • Index 267
  • About the Author 273
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