United Shoe Machineryand the Antitrust Significance of “Free” Service

United Shoe Machineryand the Antitrust Significance of “Free” Service In United States v. United Shoe MachineryCorp., United Shoe Machinery was found guilty ofillegal monopolization due to its leasing practices. Existing scholarship on this case largely focuses onthe issue of leasing versus selling. In contrast,we examine a particular practice of United's thatwas condemned: its policy of providing service forits leased machines without a separate servicecharge. Our analysis demonstrates that thispractice served an important insurance function byshifting risk from the shoe manufacturers to United,a more efficient bearer of risk, and concludes thatthis practice was efficiency enhancing. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

United Shoe Machineryand the Antitrust Significance of “Free” Service

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2000 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007883408418
Publisher site
See Article on Publisher Site

Abstract

In United States v. United Shoe MachineryCorp., United Shoe Machinery was found guilty ofillegal monopolization due to its leasing practices. Existing scholarship on this case largely focuses onthe issue of leasing versus selling. In contrast,we examine a particular practice of United's thatwas condemned: its policy of providing service forits leased machines without a separate servicecharge. Our analysis demonstrates that thispractice served an important insurance function byshifting risk from the shoe manufacturers to United,a more efficient bearer of risk, and concludes thatthis practice was efficiency enhancing.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 16, 2004

References

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