Summary Of Standard Oil Monopoly

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Monopoly is an extreme kind of market system in which a single company or a group of companies controls all or nearly whole market. Since a single owner or group of owners device market so monopoly results in higher prices and sometimes exploit consumers as they get less value products and pay more. Single firm has the monopoly power and takes over the market. In order to make things fair there are antimonopoly regulations that break the monopoly power of a single firm and hence promotes competition.
Standard oil is one the examples of monopoly in USA. The richest man in history John D. Rockefeller founded Standard oil in 1882; Standard Oil’s properties were incorporated into the Standard Oil Trust. Under this, Rockefeller created a conglomeration that included all oil production and logistics, transportation, refinement and marketing hence lowering costs and undercut competitors. Standard Oil controlled the oil goods marketplace primarily through horizontal integration …show more content…
The US Department of Justice sued the company under federal anti-trust law for sustaining a monopoly. Among the laundry list of complaints, the lawsuit argued that Standard oil had involved in “discriminatory practices in favor of the combination by railroad companies; restraint and monopolization by control of pipe lines, and unfair practices against competing pipe lines.”
The government rationale for breaking Standard oil monopoly was that they recognized four illegitimate patterns: 1) secret and semi-secret railroad rates; (2) discriminations in the open arrangement of rates; (3) discriminations in classification and rules of shipment; (4) discriminations in the treatment of private tank cars. The government was of the view that standard oil said elevated prices to its monopolistic customers but dropped them to upset competitors, often concealing its illegitimate activities by using fake apparently independent companies it
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