Ramblings & ephemera

Antitrust suits led to vertical integration & the IT revolution

From Barry C. Lynn’s “The Case for Breaking Up Wal-Mart” (Harper’s: 24 July 2006):

As the industrial scholar Alfred D. Chandler has noted, the vertically integrated firm — which dominated the American economy for most of the last century — was to a great degree the product of antitrust enforcement. When Theodore Roosevelt began to limit the ability of large companies to grow horizontally, many responded by buying outside suppliers and integrating their operations into vertical lines of production. Many also set up internal research labs to improve existing products and develop new ones. Antitrust law later played a huge role in launching the information revolution. During the Cold War, the Justice Department routinely used antitrust suits to force high-tech firms to share the technologies they had developed. Targeted firms like IBM, RCA, AT&T, and Xerox spilled many thousands of patents onto the market, where they were available to any American competitor for free.

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