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Strategic Behavior in Whiskey Distilling, 1887–1895

Published online by Cambridge University Press:  23 January 2003

Karen Clay
Affiliation:
Heinz School of Public Policy and Management, Carnegie Mellon University, Pittsburgh, PA 15213. E-mail: kclay@andrew.cmu.edu.
Werner Troesken
Affiliation:
Department of History, University of Pittsburgh, Pittsburgh, PA 15260, and Research Associate, National Bureau of Economic Research. E-mail: troesken@pitt.edu.

Abstract

This article shows that the Whiskey Trust used exclusive dealing and unusually low prices to deter entry and competition. Evidence of this is based on a unique dataset that allows us to estimate a firm-level demand curve for the trust, and to construct direct estimates of marginal cost. This article also shows that the strategies employed by the trust failed to deter entry. Market structure and state-level antitrust enforcement account for the failure of these strategies.

Type
Articles
Copyright
Copyright © The Economic History Association 2002

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