CAPITALISM AND MONOPOLISTIC COMPETITION: I. THE THEORY OF OLIGOPOLY.

The growth of individual firms to great size through merger with rivals is an outstanding development of modern economic history. The life history of the firm in late 1890s was viewed as a silhouette of that of man in an age of high infant mortality: the firm began as a small venture; if it survived the early years, it straggled along or grew at a rate governed by the entrepreneur's ability-occasionally reaching large size if his ability was extraordinary or his children's abilities great--but eventually it languished into obscurity and then into oblivion. The whole process usually took place, one infers, in one or two generations. An anthropomorphic theory of the growth of the firm, however, scarcely fits modern giants. There are no large companies in the U.S., that have not grown somewhat by merger, and probably very few that have grown much by the alternative method of internal expansion. The present paper seeks to summarize some of the major episodes in the development of the merger movement, with special reference to the question of monopoly. The discussion is restricted to so-called "horizontal" combinations, which are quantitatively much the most important form of merger.