Mikaiel Ishaque
Economics
10/25/19
Chapter 7 summary
In chapter 7 of Thomas Sowell's "Basic Economics" we discuss about how
cartels break up on their own and that all businesses try to compete with one another
secretly in order to gain more customers. Corporations are businesses owned by
multiple people, unlike enterprises which are owned by individuals. The first corporation
to have been formed in the US was the Harvard Corporation which was America's first
college. Monopolies, oligopolies, and cartels produce fewer economic results compared
to businesses that are in the free market . Monopolistic companies are companies that
produce one output good in a given region. One example of a monopoly company are
phone companies. In the US phone companies were monopolies due to them being the
only company of a certain region. Antitrust laws were placed in to make having a cartel
or monopoly outlawed in order to keep fairness in businesses. However there were
more ways in which the US was able to stop cartels and monopolies. Montgomery Ward
was a retailer who would buy out all companies that were not trusts and would have
control over certain markets such as agriculture, bikes, and twines. This would soon
make other retailers form such as Sears and A & P who would do similar tactics to that
of Montgomery Ward. According to a professor of law who had specialized n a study of
business organizations wrote to the Wall Street Journal stating that, "American
corporate law severely limits shareholders' rights." meaning that shareholders have no
input when being part of a company.