Question

Why was Rockefeller’s use of horizontal integration such an effective business tool at this time? Were his choices legal? Why or why not?

Answer 1

Answer:  Horizontal integration enabled Rockefeller to gain tremendous control over the oil industry and use that power to influence vendors and competitors. For example, he could pressure railroads into giving him lower rates because of the volume of his products. He undercut competitors, forcing them to set their prices so low that they could barely stay in business—at which point he could buy them out. Through horizontal integration, he was able to create a virtual monopoly and set the terms for business. While his business model of a holding company was technically legal at that time, it held as much power as a monopoly and did not allow for other businesses to grow and compete.