Losing to Win: U.S. Steel's Pricing, Investment Decisions, and Market Share, 1901–1938

Thomas K. McCraw and Forest Reinhardt

The Journal of Economic History, 1989, vol. 49, issue 3, 593-619

Abstract: U.S. Steel held two-thirds of the American market in 1901, but by the 1930s its share had dropped to one-third. Such a decline is consistent with the economic theory of oligopoly pricing and capacity expansion, but the available data offer limited opportunities for formal testing of hypotheses. A close examination of U.S. Steel's early history leads us to argue that Chairman Elbert Gary's desire for price stability, his fear of antitrust litigation, and shortcomings in the firm's organizational capability constrained it from the unbridled pursuit of discounted profits that the economic theory assumes.

Date: 1989
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