Just watched your current interesting exchange with Professor Wu on irrespective of whether the Typical Oil divestiture produced public policy sense.
Wu asserted that the choice was fantastic public policy. You mentioned you had been not so positive since the proof (on competitors and customer welfare) prior to divestiture could have been ambiguous. Wu had a close to heart attack at that suggestion which showed me, of course, that he has never ever study the case, has never ever study the trial record (it is 11,000 pages extended and the State of Connecticut library in Hartford basically had a copy when I was researching this case back in 1970) and has never ever study any economist (such as myself) that has done some of that operate so that professors such as Wu can be marginally smarter in policy debates.
This is one particular of the most misunderstood situations in antitrust history. (Even Bork, who gets considerably of the revisionist case history appropriate, completely flinches on this case he does almost nothing at all with it.)
The very first misunderstanding in virtually all of the law texts is that this is the very first “rule of reason” antitrust case. That implies that the SC need to have sifted via all of the conflicting details and arguments presented at court and determined that Typical had acted “unreasonably.” Entirely False. A modified rule of purpose method was articulated in the case by Justice White in 1911 but, of course, was never ever applied to the specifics in Typical.
As any antitrust lawyer can inform you this is a job for a reduce court anyway, not for the SC but this case was never ever remanded. The SC just decided that the numerous mergers by Typical prior to 1890 constituted an try to monopolize in violation of the Sherman Act and, notice, divestiture follows logically from that reasoning. But irrespective of whether Typical ever “restrained trade” (as we now have an understanding of the which means of that phrase, i.e. in a position to cut down sector output and raise sector cost) was By no means determined. Therefore irrespective of whether Typical missallocated sources, charged monopoly rates, repressed innovation, etc…was never ever decided by the SC or any other court.
Which leaves completely open the query of what was basically going on in the oil sector involving say 1880 and 1907 (aside from the numerous mergers). I determined that this sector (crude oil, transportation, refining, marketing and advertising was all extremely smaller ( this is pre-gasoline right after all) that there had been couple of if any legal barriers to entry and that enterprise organizations entered and left with some frequency, common of a young and revolutionary sector that Typical, regardless of mergers, constantly had numerous rivals in refining (Texaco, Pure Oil, Connected Oil and Gas, Sun Oil, Gulf and numerous numerous other folks) and, of course, there had been hundreds of firms in crude oil production and marketing and advertising which had been never ever “monopolized” that fees and rates decreased all through the period of alleged monopolization (even Ida Tarbell admits this. Certainly I got considerably of my price and cost information and facts from her “History of the Typical Oil Company” that Standard’s industry share decreased in the 10 year period prior to the antitrust suit (1907) and that, as John McGee argued extended ago, that Typical possibly did not engage in predatory pricing. There is considerably considerably much more to this story and I inform a fantastic share of that in “Antitrust & Monopoly.”
Possibly Wu can make the case that the divestiture in 1911 made a improved outcome (in terms of all of the points that economists measure) than what would have occurred if nothing at all dramatic had been completed. That is counter-factual so fantastic luck with that!! All I know is that his understanding of the actual history of the oil sector is really spectacular and I worry for the life of his much more curious students.
As I mentioned in the Wu debate itself, I do not know sufficient about this case and I am agnostic on the query. Nonetheless, there is a point of view you do not commonly hear, and so I am passing it along.