In this Review (1983), Mark McBride reconsiders the Federal Trade Commission's (FTC) enforcement policy toward vertical mergers between cement and ready-mix concrete firms. In response to a significant increase in acquisitions of ready-mix concrete firms by cement manufacturers during the 1960's, the FTC undertook a series of legal actions to block or dissolve the mergers. The actions of the FTC constituted one of the most intensive efforts undertaken to date to challenge vertical mergers in a single industry.' McBride (p. 1012) notes that the actions of the FTC provoked considerable debate concerning the motivation for the mergers both in the industry and in academe. A significant number of articles were published advancing various reasons for the mergers. In addition to the FTC's main contention that the mergers were motivated by a desire for captive markets, it has been suggested that there were economies of integration or that the mergers were the outcome of an erroneous view of the potential benefits to foreclosure held by executives in the beleaguered cement industry.2 McBride's 1983 paper offers another explanation for the mergers. His argument is that vertical integration was undertaken to avoid rigid oligopolistic pricing in the cement industry.3 The empirical results presented by McBride suggest that vertical integration was a significant factor in the decline of cement prices in the 1960's. The purpose of this comment is to point out some of the problems with McBride's analysis. In particular, we show that the experimental design of his testing equation is faulty and does not offer a test of his hypothesis. As a result, McBride's analysis does not provide convincing evidence on whether cement firms vertically integrated to avoid rigid oligopolistic pricing, or if cement firms were merely reacting to prices that had already begun to decline. Our intent, however, is not to challenge McBride's contention that vertical integration can provide lower prices to consumers. Rather, we would argue that the evidence presented at the FTC hearings involving cement and ready-mix concrete firms as well as McBride's and others' analyses illustrate the problems in discerning the motives for mergers.4

Metadata only record

Temporary labor migration from five countries to South Africa's mines is examined. Emigration (a) diminishes domestic crop production in the short run; (b) enhances crop productivity and cattle accumulation through invested remittances in the long run; (c) increases domestic plantation wages. Conflicting interests thus exist between employers in the sending countries and in the mines. State intervention adopted in the sending countries includes forced labor, emigration quotas, and compulsory population relocation.

We explain how to award a monopoly franchise so as to maximize expected consumers' welfare. Potential producers initially possess imperfect private information about production cost. The franchise is awarded to the producer with the lowest expected costs, but prices exceed realized marginal costs. These ex post distortions foster more competitive bidding ex ante. The distortions for any bid-cost pair are invariant to the number of bidders (n), though expected distortions and profits decline with n.