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A Schumpeterian View of the Great Merger Movement in American Manufacturing, 1895-1904


Donald J. Smythe


California Western School of Law

May 2002


Abstract:     
This paper offers a Schumpeterian view of the Great Merger Movement in the American manufacturing industries, 1895-1904. From this perspective, the Great Merger Movement was a response to competitive pressures associated with a number of significant technological innovations which occurred at the end of the nineteenth century. Because the implementation of these innovations required large capital investments, and because the returns to the investments would have been highly uncertain if they had been made competitively, firms at turn of the nineteenth century sought to restrain competition. Since the uncertainty precluded cooperating at arms length, cooperation was internalized through horizontal consolidations. The consolidations in turn increased the size of the capital investments undertaken to implement the technological innovations. The theory is supported with historical evidence about the technological environment and industry conditions at the turn of the nineteenth century, and an econometric model is tested using data from the Twelfth and Thirteenth Censuses of Manufactures.

Number of Pages in PDF File: 35

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Date posted: September 15, 2005  

Suggested Citation

Smythe, Donald J., A Schumpeterian View of the Great Merger Movement in American Manufacturing, 1895-1904 (May 2002). Available at SSRN: http://ssrn.com/abstract=799355 or http://dx.doi.org/10.2139/ssrn.799355

Contact Information

Donald J. Smythe (Contact Author)
California Western School of Law ( email )
225 Cedar Street
San Diego, CA 92101
United States
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