Interesting, though the conclusion that the claims of Standard Oil's monopoly power were overblown (and so are those claims regarding today's tech titans) is completely unsupported by the article.
Interesting, though the conclusion that the claims of Standard Oil's monopoly power were overblown (and so are those claims regarding today's tech titans) is completely unsupported by the article.
My takeaway is that it wasn't just monopoly power. They also had technological and structural advantages, which explain why they got there first rather than some other firm. Also that the...
My takeaway is that it wasn't just monopoly power. They also had technological and structural advantages, which explain why they got there first rather than some other firm.
Also that the technology resulted in increasing returns to scale, so a monopoly was in some sense the natural outcome. If there were no Standard Oil then another firm would likely have gotten there.
There are a lot of industries where the marketplace needs to be managed to keep competition going.
Absolutely. Efficiencies of scale matter more in some industries than others, and there comes a point where simple physics pushes the market towards consolidation. It's then the (hopeful) role of...
Absolutely. Efficiencies of scale matter more in some industries than others, and there comes a point where simple physics pushes the market towards consolidation. It's then the (hopeful) role of government to keep that consolidation from exerting excessive influence on society.
I didn't realize that the more popular texts didn't cover the details of Standard Oil's genesis. That piqued my curiosity, given my interest in oil and energy-related topics. Almost all commentary seemed to focus on railroad deals or other minutiae instead of what my background suggests should have been the key: returns to scale and capital efficiency.
Thankfully, my research assistant, GPT-5, found some excerpts of the excellent book "John D. Rockefeller: The Cleveland Years" by Grace Goulder, which I bought and read. Goulder is an interesting character, having written about local Ohio history most of her life. After her husband died, she took on the project of organizing the Western Reserve Historical Society's files on Rockefeller (he had been a vice president of the society for "decades"). The book was the result. Goulder's tone is much more neutral and friendly than many on the subject.
The book provides enough details to piece together how the early Standard Oil business model worked. The reality seems different than many popular accounts and is much more logically consistent.
Interesting, though the conclusion that the claims of Standard Oil's monopoly power were overblown (and so are those claims regarding today's tech titans) is completely unsupported by the article.
My takeaway is that it wasn't just monopoly power. They also had technological and structural advantages, which explain why they got there first rather than some other firm.
Also that the technology resulted in increasing returns to scale, so a monopoly was in some sense the natural outcome. If there were no Standard Oil then another firm would likely have gotten there.
There are a lot of industries where the marketplace needs to be managed to keep competition going.
Absolutely. Efficiencies of scale matter more in some industries than others, and there comes a point where simple physics pushes the market towards consolidation. It's then the (hopeful) role of government to keep that consolidation from exerting excessive influence on society.
From the blog post: