Law Commons^™

The Law Of Vertical Integration And The Business Firm, 1880-1960, Herbert Hovenkamp

Herbert Hovenkamp

ABSTRACT

Vertical integration occurs when a firm does something for itself that it could otherwise procure on the market. For example, a manufacturer that opens its own stores is said to be vertically integrated into distribution. Both classical political economy and marginalist economics saw vertical integration and vertical contractual arrangements as much less threatening to competition than cartels or other horizontal arrangements. Nevertheless, vertical integration produced by far the greater amount of legislation at both federal and state levels and motivated many more political action groups. Two things explain this phenomenon. First, while economists prior to the 1930s rarely saw …

Neoclassicism And The Separation Of Ownership And Control, Herbert Hovenkamp

Herbert Hovenkamp

NEOCLASSICISM AND THE SEPARATION OF OWNERSHIP AND CONTROL Herbert Hovenkamp ABSTRACT The separation of ownership and control is a phrase that will forever be associated with Adolf A. Berle and Gardiner C. Means The Modern Corporation and Private Property (1932), as well as with Institutionalist economics, Legal Realism, and the New Deal. Neoclassical economists have generally been sharply critical, both of the historical facts that Berle and Means purported to describe and of the conclusions that they drew. In fact, however, the separation of ownership and control had already been an essential element of the neoclassical theory of corporate governance …

United States Competition Policy In Crisis, 1890-1955, Herbert Hovenkamp

Herbert Hovenkamp

UNITED STATES COMPETITION POLICY IN CRISIS,1890-1955 Herbert Hovenkamp ABSTRACT The development of marginalist, or neoclassical, economics led to a fifty-year long crisis in competition theory. Given an industrial structure with sufficient fixed costs, competition always became "ruinous," forcing firms to cut prices to marginal cost without sufficient revenue remaining to pay off investment. Early neoclassicists such as Alfred Marshall were not able to solve this problem, and as a result many economists were hostile toward the antitrust laws in the early decades of the twentieth century. The ruinous competition debate came to an abrupt end in the early 1930's, when …

The Neoclassical Crisis In U.S. Competition Policy, 1890-1960, Herbert Hovenkamp

Herbert Hovenkamp

ABSTRACT The development of marginalist, or neoclassical, economics led to a fifty-year long crisis in competition policy. Given an industrial structure with sufficient fixed costs, competition always became "ruinous," forcing firms to cut prices to marginal cost without sufficient revenue remaining to pay off investment. Early neoclassicists such as Alfred Marshall were not able to solve this problem. As a result many early twentieth century economists were hostile toward the antitrust laws. The ruinous competition debate came to an abrupt end in the early 1930's, when economists Joan Robinson in Great Britain and particularly Edward Chamberlin in the United States …