The Market that Antitrust Built: Public Policy, Private Coercion, and Railroad Acquisitions, 1825 to 1922

American Sociological Review, Vol. 65, No. 5. (Oct., 2000), pp. 631-657

28 Pages Posted: 22 Mar 2014

See all articles by Frank Dobbin

Frank Dobbin

Harvard University - Department of Sociology

Timothy J. Dowd

Emory University - Department of Sociology

Date Written: 2000

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.

Suggested Citation

Dobbin, Frank and Dowd, Timothy J., The Market that Antitrust Built: Public Policy, Private Coercion, and Railroad Acquisitions, 1825 to 1922 (2000). American Sociological Review, Vol. 65, No. 5. (Oct., 2000), pp. 631-657. Available at SSRN: https://ssrn.com/abstract=2412180

Frank Dobbin (Contact Author)

Harvard University - Department of Sociology ( email )

33 Kirkland Street
Cambridge, MA 02138
United States

Timothy J. Dowd

Emory University - Department of Sociology ( email )

Atlanta, GA 30322
United States

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