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George W. Stocking Sr.
|Died||June 7, 1975 82)(aged|
|Institution||University of Texas at Austin|
|Alma mater|| Columbia University |
University of Texas at Austin
| Thorstein Veblen |
Wesley Clair Mitchell
George Ward Stocking Sr. (September 24, 1892 – June 7, 1975) was an American economist, who was one of the pioneers of industrial organization and an early writer on international cartels.
After completing a Ph.D. degree from Columbia University in 1925, he was professor of economics at the University of Texas at Austin from 1926 to 1947. During 1933-1943 he held several positions with the federal government, including the Antitrust Division of the U.S. Department of Justice, where he advised Attorney General Thurman Arnold. He founded and was professor and chair of the Department of Economics at Vanderbilt University in 1947, where he remained from 1947 to 1963. He was elected president of the Southern Economic Association in 1952, and of the American Economic Association in 1958. 
Stocking was a pioneering economist of industrial organization. Stocking's most enduring research was published in three volumes: Cartels in Action (1946), Cartels or Competition? (1948), and Monopoly and Free Enterprise (1951). The first two volumes were seminal works in the field of empirical studies of price-fixing cartels; in them Stocking synthesized lavish quantitative and qualitative data on international cartels in eight markets that demonstrated their internal mechanisms, pervasiveness in the economy, and effects on industrial performance. The third volume addressed the problems of market power in the U.S. economy and public policies to ensure the benefits of free enterprise.
Stocking graduated from Clarendon College in Texas (BA 1918), the University of Texas (BA 1918, MA 1921), and Columbia University (Ph.D. 1925). His mentors at Columbia were Thorstein Veblen and Wesley Clair Mitchell.
Stocking's first book was an empirical study of competition in the petroleum industry, in which he had worked as a "roughneck" in the oil fields of western Texas. While teaching at the University of Texas, Stocking had his first taste of public service as a member of the Consumer Advisory Board of the National Recovery Administration (NRA) in the mid-1930s, where he observed the destructive effects of the brief U.S. legalization of industrial cartels.
When the antitrust laws were reinstated after about 1937, Stocking served through the early 1940s as an economic adviser to the great head of the Antitrust Division of the Department of Justice, Thurman Arnold. It was Arnold who initiated for the first time a large number of successful U.S. criminal prosecutions of international cartels in the mid-1940s. Information from these prosecutions and from Congressional investigations of the nefarious roles played by cartels in facilitating the economic policies of national socialism formed the basis of Stocking's two landmark books on international price-fixing cartels.
In the 1950s, Stocking was involved in several issues that had lasting effects on antitrust enforcement. Perhaps Stocking's best-known journal article was a 1955 article in the American Economic Review that addressed what is now known as the "Cellophane Paradox." In research on the DuPont company arising from his student's (Willard F. Mueller) Ph.D. dissertation, Stocking and Mueller pointed out the error of mistaking a monopolist's inability to exercise market power by raising price above the current price for an inability to have already exercised market power by raising price significantly above the competitive price. Courts that use a monopolized product's elevated market price will typically misconstrue a completed anticompetitive act as a lack of market power. A second issue addressed by Stocking was the extent to which concepts of "workable competition" and the "rule of reason" should be employed in antitrust enforcement.
An oligopoly is a market in which control over an industry lies in the hands of a few large sellers who own a dominant share of the market. Oligopolistic markets can be described as having homogenous products, few market participants and inelastic demand for the products in those industries. As a result of the significant market power firms tend to have in oligopolistic markets, these firms are exposed to the privilege of influencing prices through manipulating the supply function. in addition to that, these firms can be described as mutually interdependent. This is because any action by one firm is expected to affect other firms in the market and evoke a reaction or consequential action. To remedy that, firms in oligopolistic markets often resort to collusion as means of maximising profits.
A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. A cartel is an organization formed by producers to limit competition and increase prices by creating artificial shortages through low production quotas, stockpiling, and marketing quotas. Cartels can be vertical or horizontal but are inherently unstable due to the temptation to defect and falling prices for all members. Additionally, advancements in technology or the emergence of substitutes may undermine cartel pricing power, leading to the breakdown of the cooperation needed to sustain the cartel. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Most jurisdictions consider it anti-competitive behavior and have outlawed such practices. Cartel behavior includes price fixing, bid rigging, and reductions in output. The doctrine in economics that analyzes cartels is cartel theory. Cartels are distinguished from other forms of collusion or anti-competitive organization such as corporate mergers.
In economics, industrial organization is a field that builds on the theory of the firm by examining the structure of firms and markets. Industrial organization adds real-world complications to the perfectly competitive model, complications such as transaction costs, limited information, and barriers to entry of new firms that may be associated with imperfect competition. It analyzes determinants of firm and market organization and behavior on a continuum between competition and monopoly, including from government actions.
In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses to promote competition and prevent unjustified monopolies. The three main U.S. antitrust statutes are the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. These acts serve three major functions. First, Section 1 of the Sherman Act prohibits price fixing and the operation of cartels, and prohibits other collusive practices that unreasonably restrain trade. Second, Section 7 of the Clayton Act restricts the mergers and acquisitions of organizations that may substantially lessen competition or tend to create a monopoly. Third, Section 2 of the Sherman Act prohibits monopolization.
Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition by deceiving, misleading or defrauding others of their legal right. Collusion is not always considered illegal. It can be used to attain objectives forbidden by law; for example, by defrauding or gaining an unfair market advantage. It is an agreement among firms or individuals to divide a market, set prices, limit production or limit opportunities. It can involve "unions, wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties". In legal terms, all acts effected by collusion are considered void.
Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust law, anti-monopoly law, and trade practices law; the act of pushing for antitrust measures or attacking monopolistic companies is commonly known as trust busting.
In economics, market power refers to the ability of a firm to influence the price at which it sells a product or service by manipulating either the supply or demand of the product or service to increase economic profit. To make it simple, companies with strong market power can decide whether higher the price above competition levels or lower their quality produced but no need to worry about losing any customers, the strong market power for a company prevents they are involving competition. In other words, market power occurs if a firm does not face a perfectly elastic demand curve and can set its price (P) above marginal cost (MC) without losing revenue. This indicates that the magnitude of market power is associated with the gap between P and MC at a firm's profit maximising level of output. The size of the gap, which encapsulates the firm's level of market dominance, is determined by the residual demand curve's form. A steeper reverse demand indicates higher earnings and more dominance in the market. Such propensities contradict perfectly competitive markets, where market participants have no market power, P = MC and firms earn zero economic profit. Market participants in perfectly competitive markets are consequently referred to as 'price takers', whereas market participants that exhibit market power are referred to as 'price makers' or 'price setters'.
Edward Hastings Chamberlin was an American economist. He was born in La Conner, Washington, and died in Cambridge, Massachusetts.
In competition law, before deciding whether companies have significant market power which would justify government intervention, the test of small but significant and non-transitory increase in price (SSNIP) is used to define the relevant market in a consistent way. It is an alternative to ad hoc determination of the relevant market by arguments about product similarity.
Competition law theory covers the strands of thought relating to competition law or antitrust policy.
The National Industrial Recovery Act of 1933 (NIRA) was a US labor law and consumer law passed by the 73rd US Congress to authorize the president to regulate industry for fair wages and prices that would stimulate economic recovery. It also established a national public works program known as the Public Works Administration (PWA). The National Recovery Administration (NRA) portion was widely hailed in 1933, but by 1934 business opinion of the act had soured.
The Cellophane paradox describes a type of incorrect reasoning used in market regulation methods.
Donald Frank Turner was an American antitrust attorney, economist, legal scholar and educator who spent most of his career teaching at Harvard Law School. He was also Assistant Attorney General in charge of the Antitrust Division from 1965-68.
Joe Staten Bain was an American economist associated with the University of California, Berkeley. Bain was designated a Distinguished Fellow by the American Economic Association in 1982. An accompanying statement referred to him as "the undisputed father of modern Industrial Organization Economics."
The history of United States antitrust law is generally taken to begin with the Sherman Antitrust Act 1890, although some form of policy to regulate competition in the market economy has existed throughout the common law's history. Although "trust" had a technical legal meaning, the word was commonly used to denote big business, especially a large, growing manufacturing conglomerate of the sort that suddenly emerged in great numbers in the 1880s and 1890s. The Interstate Commerce Act of 1887 began a shift towards federal rather than state regulation of big business. It was followed by the Sherman Antitrust Act of 1890, the Clayton Antitrust Act and the Federal Trade Commission Act of 1914, the Robinson-Patman Act of 1936, and the Celler-Kefauver Act of 1950.
Effective competition is a concept first proposed by John Maurice Clark, then under the name of "workable competition," as a "workable" alternative to the economic theory of perfect competition, as perfect competition is seldom observed in the real world.
Jesse William Markham was an American economist. Markham was best known for his work on antitrust policy, price theory and industrial organization. Markham was the Charles Edward Wilson Professor of Business Administration at Harvard Business School (HBS), and the former chief economist to the Federal Trade Commission.
Corwin D. Edwards was an American economist.
Joseph Borkin was an American economic lawyer and book author.
Cartel theory is usually understood as the doctrine of economic cartels. However, since the concept of 'cartel' does not have to be limited to the field of the economy, doctrines on non-economic cartels are conceivable in principle. Such exist already in the form of the state cartel theory and the cartel party theory. For the pre-modern cartels, which existed as rules for tournaments, duels and court games or in the form of inter-state fairness agreements, there was no scientific theory. Such has developed since the 1880s for the scope of the economy, driven by the need to understand and classify the mass emergence of entrepreneurial cartels. Within the economic cartel theory, one can distinguish a classical and a modern phase. The break between the two was set through the enforcement of a general cartel ban after Second World War by the US government.