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85 S. Cal. L. Rev. 499 (2011-2012)
Rethinking the Economic Basis of the Standard Oil Refining Monopoly: Dominance against Competing Cartels

handle is hein.journals/scal85 and id is 505 raw text is: RETHINKING THE ECONOMIC BASIS OF THE STANDARD OIL REFINING MONOPOLY: DOMINANCE AGAINST COMPETING CARTELS GEORGE L. PRIEST* ABSTRACT The success of the Standard Oil monopoly is not well understood. Standard Oil first developed a monopoly over the refining of crude oil, though later extended its control to gathering pipelines, later still to trunk pipelines (from the western Oil Regions to East Coast ports) and, even later, expanded operations to include oil production (drilling) and retail sales at the time the Supreme Court ordered its dissolution over 100 years ago, in 1911. Though there are several journalistic exposgs of Standard Oil- including Henry Demarest Lloyd and Ida Tarbell, as well as business histories-none are fully explanatory. The currently dominant theory of Standard Oil's success is by Elizabeth Granitz and Benjamin Klein who assert that Standard Oil was chosen by oil shippers, the railroads, to police a railroad cartel. According to Granitz and Klein, the railroads split with Standard Oil the profits from cartelization of the crude and refined oil industry. * Edward J. Phelps Professor of Law and Economics and Kauffman Distinguished Research Scholar in Law, Economics, and Entrepreneurship, Yale Law School. I am grateful to Jonathan Kandelshein for excellent research assistance and to the Milton and Miriam Handler Foundation for a grant to Yale Law School for support for this work. I am also grateful to Alvin K. Klevorick, Bruce Ackerman, Robert Ellickson, Benjamin Klein, Claire Priest, Nicholas Priest, Norman Silber and to participants in the Yale Law School Faculty Workshop for comments on an earlier draft. 499

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