John Bates Clark on Trusts: New Light from the Columbia Archives

Luca Fiorito () and John F. Henry ()

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: The paper sheds new light on John Bates Clark’s mature position on the “trust” issue. Access to previously unpublished 1911 testimony before the Interstate Commerce Committee of the U.S. Senate, it is shown that, although Clark relied generally on competitive forces to keep monopoly power in check, following the Standard Oil and American Tobacco cases of that year, he lost considerable faith in the power of his concept of “potential competition,” or latent competition that may or may not be realized. What he advocates here is government promotion of actual competition, largely through the dissolution of the “perilous” trusts and the development of a common pricing policy where all producers face the same price regimes in both the output and input markets. What is desired as an outcome is the promotion of what Clark terms “tolerant competition.” Tolerant competition is not the perfect competition of the neoclassical model, nor the rough-andready competition of the pre-1870 era. Rather, it is a live-and-let-live form of competition where big firms and small firms face the same pricing conditions and only efficiency determines the profit outcome.

JEL-codes: B13 B31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ene, nep-his and nep-hpe
Date: Written 2005-09
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Persistent link: http://EconPapers.repec.org/RePEc:usi:wpaper:462

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