How did the formation of cartels and corporations in the late 1800s both benefit and harm consumers?

1 Answer | Add Yours

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

There is a great deal of controversy on this topic between liberal and conservative historians.  The former tend to believe the corporations and cartels hurt consumers while the latter believe they helped.

Corporations and cartels often helped consumers by lowering prices while simultaneously producing more goods and services.  This happened because of the competition that drove the growth of companies.  As corporations were being formed they were also fighting hard to try to become monopolies.  They fought by making themselves more efficient so that they could reduce the prices the charged.  By doing so, they could drive competitors out of business.  This competition generally helped consumers by driving prices down.

Some historians do say that the rise of corporations and cartels hurt consumers.  The corporations and cartels that were able to get monopoly power in any given area were, they say, able to charge high prices.  This was because there was little or no competition for them.  Because they did not have to compete, they had no incentive to drop prices.

Thus, it is possible to say that corporations fought for market share and, thereby, generally helped consumers.  However, there were times when they harmed consumers if they were able to successfully form a cartel or a monopoly which allowed them to set prices higher than they should have been.

Sources:

We’ve answered 318,911 questions. We can answer yours, too.

Ask a question