From the First World War to the National Recovery Administration (1917-1935) - The Case for Regulated Competition in the United States during the Interwar Period

Abstract

The purpose of the Working Papers is to disseminate the results of research conducted by CIRANO research members in order to solicit exchanges and comments. These reports are written in the style of scientific publications. The ideas and opinions expressed in these documents are solely those of the authors.Les cahiers de la série scientifique visent à rendre accessibles les résultats des recherches effectuées par des chercheurs membres du CIRANO afin de susciter échanges et commentaires. Ces cahiers sont rédigés dans le style des publications scientifiques et n'engagent que leurs auteurs.CIRANO is a private non-profit organization incorporated under the Quebec Companies Act. Its infrastructure and research activities are funded through fees paid by member organizations, an infrastructure grant from the government of Quebec, and grants and research mandates obtained by its research teams. Le CIRANO est un organisme sans but lucratif constitué en vertu de la Loi des compagnies duQuébec. Le financement de son infrastructure et de ses activités de recherche provient des cotisations de ses organisations-membres, d'une subvention d'infrastructure du gouvernement du Québec, de même que des subventions et mandats obtenus par ses équipes de recherche. CIRANO Partners -Les partenaires du CIRANO Corporate Partners -Partenaires corporatifs Autorité des marchés financiers Bank of Canada Bell Canada BMO Financial Group Business Development Bank of Canada Caisse de dépôt et placement du Québec

Information Exchange among Firms: The Coherence of Justice Brandeis’ Regulated Competition Approach

“…As presented in Kirat and Marty (2020b), the case law reversal occurred in 1925 with Cement Manufacturers 55 and Maple Flooring. 56 Information exchange among competitors was presented as a means of avoiding destructive competition in industries characterized by high fixed costs.…”

“…23 As reshaped by the Swope Plan, this proposal would impose coercion on reluctant economic players. The NIRA experience with the mandatory adherence to codes of conduct could be an avatar of this approach (Kirat and Marty, 2020b).…”

“…This experience inspired several approaches to post-war regulated competition (Kirat and Marty, 2020b). The trade associations model was then advocated by Herbert Hoover.…”

“…The idea was that the price was based on the addition of a mark-up to the costs and that it was therefore a question of stabilizing competition through better collective knowledge of costs through technical and accounting standardization. 42 It was therefore a decentralized business commonwealth in which public authorities also had a role to play as facilitators and guarantors but not as coercive powers as the Swope Plan would advocate in the early 1930s and as the National Recovery Administration functioned during the First New Deal (Kirat and Marty, 2020b).…”

“…The latter amounts to a cartelization of the economy under the aegis of large firms and one made compulsory by the state. The Swope Plan was at odds both with Hoover's views and Brandeis's views but would have a significant influence on the First New Deal (Kirat and Marty, 2020b). The Hoover administration was paradoxically characterized by a more Kirby (1988) shows that trade associations operating as quid pro quo information-exchange mechanisms may arise at equilibrium in oligopolistic industries in which individual firms compete à la Cournot.…”