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.
Review of Industrial Organization – Springer Journals
Published: Oct 16, 2004
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