Standard Oil

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Submitted By arougeux
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Standard Oil

Abstract

In this paper I discuss Antitrust laws were created to preserve and promote free competition between companies. These laws were developed over the years and encourage corporations to have lower pricing and produce better products for consumers. Without laws, businesses could merge to create monopolies or engage in exclusive contracts that can increase market prices.

Standard Oil was investigated due to the nature of how they gained a monopoly in the oil business. They controlled 90% of the oil refined in the United States due to their collusion between the individual companies under the corporate shell (“The dismantling,” 2004). Their market power was so high that they sold more oil overseas than the U.S. Among their tactics, they undercut prices temporarily to force their competitors to either sell to Standard Oil or close their business. They purchased the equipment needed to make oil barrels so that their competitors could not get their oil to their customers. They used thugs and threats of violence against those that refused to bend to their demands. And finally, their attitude and lack of cooperation towards the government intervention alongside the widespread disgust and revulsion by the public led Standard Oil to be charged under the Sherman Anti-Trust Act (Kopel & Bast., 2001).

Some of the pecuniary and nonpecuniary costs included closing of businesses, monopoly pricing of oil and the refined products, higher unemployment, and lower competition. Standard Oil could control the output of oil and thereby affecting businesses that were not even directly involved in the oil business. And by using thugs and physical violence, the loss of physical items and/or hospitalization of people increased (“The Sherman,” 2008)

This Act authorized the Federal Government to eliminate trusts. In1911, after years of legal…...

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