Search Results
Report
Transportation and development: insights from the U.S., 1840-1860
We study the effects of large transportation costs on economic development. We argue that the Midwest and the Northeast of the U.S. is a natural case because starting from 1840 decent data is available showing that the two regions shared key characteristics with today?s developing countries and that transportation costs were large and then came way down. To disentangle the effects of the large reduction in transportation costs from those of other changes that happened during 1840?1860, we build a model that speaks to the distribution of people across regions and across the sectors of ...
Report
What ever happened to the Puerto Rican sugar manufacturing industry?
Beginning in the early 1900s, Puerto Rican sugar has entered the U.S. mainland tariff free. Given this new status, the Puerto Rican sugar industry grew dramatically, soon far outstripping Louisiana?s production. Then, in the middle 1960s, something amazing happened. Production collapsed. Manufacturing sugar in Puerto Rico was no longer profitable. Louisiana, in contrast, continued to produce and grow sugar. We argue that local economic policy was responsible for the industry?s demise. In the 1930s and 1940s, the local Puerto Rican government enacted policies to stifle the growth of large ...
Report
Economists Should Be Studying Monopoly Much More Extensively: How Our Interest in Monopoly Waned After We Began Thinking About Monopoly All Wrong
Our forebears --- including Adam Smith, Anne Robert Jacques Turgot, William Stanley Jevons, Frank A. Fetter, Lionel Robbins, Jacob Viner, Henry Simons and Thurman Arnold --- understood there were many types of groups or organizations that develop into monopolies, including trade associations, cartels, unions, cooperatives and professional associations. They also emphasized that it's difficult to know the full extent of monopolization, as many monopolies were informally organized, while others, perhaps the majority, were alliances of monopolies, making both types hard to detect. Our forebears ...
Report
New and larger costs of monopoly and tariffs
Fifty-eight years ago, Harberger (1954) estimated that the costs of monopoly, which resulted from misallocation of resources across industries, were trivial. Others showed the same was true for tariffs. This research soon led to the consensus that monopoly costs are of little significance?a consensus that persists to this day. ; This paper reports on a new literature that takes a different approach to the costs of monopoly. It examines the costs of monopoly and tariffs within industries. In particular, it examines the histories of industries in which a monopoly is destroyed (or tariffs ...
Report
Breaking down the barriers to technological progress: how U.S. policy can promote higher economic growth
1996 Annual Report essay
Report
Mass Production of Houses in Factories in the United States: The First and Only “Experiment” Was a Tremendous Success
We show that the first and only experiment of U.S. mass production of houses, in a factory-built home industry that became known as the Mobile Home industry (and today, as the Manufactured Home industry), was a tremendous success. Mobile Home prices-psf fell by two-thirds from 1955 to 1973, as productivity soared; home quality rose significantly, with Mobile Home building codes receiving ANSI certification in 1963 and National Fire Protection Association co-sponsorship in 1965; as production soared, Mobile Homes accounted for one-third of single-family homes produced in the early 1970s. These ...
Report
The economic performance of cartels: evidence from the New Deal U.S. sugar manufacturing cartel, 1934-74
We study the U.S. sugar manufacturing cartel that was created during the New Deal. This was a legal-cartel that lasted 40 years (1934-74). As a legal-cartel, the industry was assured widespread adherence to domestic and import sales quotas (given it had access to government enforcement powers). But it also meant accepting government-sponsored cartel-provisions. These provisions significantly distorted production at each factory and also where the industry was located. These distortions were reflected in, for example, a declining industry recovery rate, that is, the pounds of white sugar ...
Working Paper
Monopolies: Silent Spreaders of Poverty and Economic Inequality
The Covid-19 crisis has exposed the vast inequalities that exist within the US economy. As the virus has spread silently, it has laid bare other crises that face our nation---especially the economic vulnerabilities of the country's poor and marginalized. Many of these vulnerabilities can, in fact, be traced back to a single cause that itself has spread silently, but over the last several decades, not months: Monopolies. That monopolies are "silent spreaders of poverty and economic inequality" was well known to economic and legal scholars of the 1930s and 1940s. Wendell Berge, who was ...
Report
Monopolies Inflict Great Harm on Low- and Middle-Income Americans
Today, monopolies inflict great harm on low- and middle-income Americans. One particularly pernicious way they harm them is by sabotaging low-cost products that are substitutes for the monopoly products. I'll argue that the U.S. housing crisis, legal crisis, and oral health crisis facing the low- and middle-income Americans are, in large part, the result of monopolies destroying low-cost alternatives in these industries that the poor would purchase. These results would not surprise those studying monopolies in the first half of the 20th century. During this period extensive evidence was ...
Discussion Paper
New and Larger Costs of Monopoly and Tariffs
Fifty-eight years ago, Harberger (1954) estimated that the costs of monopoly, which resulted from misallocation of resources across industries, were trivial. Others showed that the same was true for tariffs. This research soon led to the consensus that monopoly costs are of little significance?a consensus that persists to this day. This paper reports on a new literature that takes a different approach to the costs of monopoly. It examines the costs of monopoly and tariffs within industries. In particular, it examines the histories of industries in which a monopoly is destroyed (or tariffs ...