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  • Essay / The first industrial revolutions - 1394

    John D. Rockefeller created a trust to rid the competition. This strategy allowed large oil companies to continue their growth by absorbing all competition. Through such economies of scale, Rockefeller was able to reduce its costs to such an extent that any remaining competitors would be unable to afford the costs of remaining in business. The public is concerned because competition is necessary to keep prices low in the long term and encourages passage of the Sherman Antitrust Act to dismantle the oil cartel. Standard Oil had engaged in price discrimination by giving the railroads special prices in exchange for preferential treatment by using the railroads to ship their oil. They shipped so much oil by rail that if the railroad lost business, they would lose a lot of it.