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

By F. Dobbin, T. Dowd. American Sociological Review, 2000

236 citations recorded by the source corpus.

How do new business models emerge? Neoinstitutionalists 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.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/581edade02479f0ba0152848c1a5df777177faf6

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Citations in the corpus

Sources of Durability and Change in Market Classifications: A Study of the Reconstitution of Product Categories in the American Mutual Fund Industry, 1944-1985 (2004, background): “Recent research on institutional dynamics has tracked how macrolevel shifts in beliefs such as logics facilitate changes in organizations (e.g., Dobbin & Dowd 1997, 2000; Haveman & Rao 1997; Ruef & Scott 1998; Thornton & Ocasio 1999) but has glossed over the actual processes by which existing…”
Do economists make policies? On the political effects of economics (2014, background): “First, they matter because they construct political interests, which only make sense in light of individuals’ ideas about how the world works (Dobbin and Dowd, 2000; Blyth, 2002; Anderson, 2008).”
Organizational Environments in Flux: The Impact of Regulatory Punctuations on Organizational Domains, CEO Succession, and Performance (2001, methodology): “More specifically, Dobbin and Dowd (2000) demonstrated that a Supreme Court ruling in 1897 enforcing antitrust laws spawned a market for amicable (rather than predatory) mergers among Massachusetts railroads.”
Stakeholder Rights and Corporate Governance: A Cross-National Study of Hostile Takeovers (2004, background): “Both financial economists and organizational scholars stress the importance of macroeconomic factors, especially the business cycle and macroeconomic uncertainty (Becketti, 1986; Haunschild, 1993; Dobbin and Dowd, 2000).”
What's on the path? Path dependence, organizational diversity and the problem of institutional change in the US economy, 1900-1950 (2007, background): “For some accounts, it was antitrust laws which took associative and collaborative forms of order off the table (Fligstein, 1990; Schneiberg and Hollingsworth, 1990; Dobbin and Dowd, 2000).”
Organizations, Regulation, and Economic Behavior: Regulatory Dynamics and Forms from the Nineteenth to Twenty-First Century (2008, background): “Returning to the railroad case, Berk (1994), Dobbin & Dowd (2000), and Dunlavy (1994) find that autonomous corporations and a competitive market were not the state of nature.”
Concentration and Diversity Revisited: Production Logics and the U.S. Mainstream Recording Market, 1940-1990 (2004, background): “…the contingent impact of institutional logics on the evolution of markets, economic sociologists demonstrate a striking variety of markets found across time and place, rather than a singular ideal type (e.g., Dobbin & Dowd, 2000; Schneiberg & Bartley 2001; Thornton & Ocasio 1999; see note 3).”
The Global Diffusion of Public Policies: Social Construction, Coercion, Competition or Learning? (2007, background): “Studies of diffusion across individuals, organizations, and social movements have a venerable tradition in sociology (Coleman et al. 1966b, Davis et al. 1994, Dobbin 1994, Dobbin & Dowd 2000, Edelman 1992, Hagerstrand 1967, Rogers 1995, Strang & Meyer 1993, Strang & Soule 1998).”