%0 Journal Article
%T MERGER FOR MONOPOLY: THE FORMATION OF U.S. STEEL
%A Charles S. Reback
%J Essays in Economic & Business History
%D 2007
%I The Economic & Business History Society
%X Scholars have posited three reasons as to why U.S. Steel Corporation was formed: to swindle the public, to monopolize the steel industry, or to become a more efficient firm. The evidence from a stock market event study shows that from its inception, U.S. Steel was viewed as a monopolistic competitor. The stock prices of component and competing firms reacted positively to the announcement of the company¡¯s formation. This is consistent with the theory that U.S. Steel was formed to monopolize the domestic steel industry, inconsistent with the theory that U.S. Steel was formed to become a more efficient firm, and inconsistent with the theory that US. Steel was formed in order to sell overpriced stock to an unsuspecting public. These results confirm Stigler¡¯s conclusions in his classic paper ¡°The Dominant Firm and the Inverted Umbrella,¡± despite that paper¡¯s empirical flaws. Further, this conclusion is supported by much of the recent literature on U:S. Steel.
%U http://www.ebhsoc.org/journal/index.php/journal/article/view/221