A Schumpeterian View of the Great Merger Movement in American Manufacturing

Cliometrica, Vol. 4, No. 2, July 2010

40 Pages Posted: 8 Apr 2009  

Donald J. Smythe

California Western School of Law

Date Written: April 7, 2009

Abstract

This paper offers a Schumpeterian view of the Great Merger Movement in the American manufacturing industries, which occurred from 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 the turn of the twentieth 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 industrial conditions at the turn of the twentieth century, and an econometric model is tested using data from the Twelfth and Thirteenth Censuses of Manufactures.

Keywords: Great Merger Movement, Technological Change, Market Power, Schumpeterian Hypothesis, Antitrust.

Suggested Citation

Smythe, Donald J., A Schumpeterian View of the Great Merger Movement in American Manufacturing (April 7, 2009). Cliometrica, Vol. 4, No. 2, July 2010. Available at SSRN: https://ssrn.com/abstract=1374600

Donald J. Smythe (Contact Author)

California Western School of Law ( email )

225 Cedar Street
San Diego, CA 92101
United States

Paper statistics

Downloads
83
Rank
249,757
Abstract Views
600