Strategies for Monopoly: Vertical and Horizontal Integration
Compare vertical and horizontal integration strategies used by Rockefeller and Carnegie to build monopolies and eliminate competition in the Gilded Age in Grade 8 history.
Key Concepts
Powerful business leaders aimed to eliminate competition and control entire industries. One method was horizontal integration , where a company buys out its competitors. An oil company, for example, could purchase other oil refineries to dominate the market.
Another strategy was vertical integration . This involved owning all the different businesses on which a company depended for its operation. A steel producer might buy coal mines, iron ore fields, and the railroads needed to transport materials, controlling every step of production.
Common Questions
What is horizontal integration?
Horizontal integration is when a company buys out its competitors in the same industry, like Rockefeller's Standard Oil purchasing rival oil refineries to control the entire market.
What is vertical integration?
Vertical integration is when a company controls all stages of production—from raw materials to finished product—like Carnegie Steel owning iron mines, ships, and railroads.
How did monopolies affect American consumers?
With no competition, monopolies could charge any price they wanted and provide poor service, harming consumers and small businesses who depended on these industries.