The National Recovery Administration and the Rubber Tire Industry, 1933–1935

Abstract

In the 1920s and 1930s, the rubber tire industry faced debilitating challenges, mostly brought about by changes in the industry's retail structure and exacerbated by the Great Depression. Segments of the industry attempted to use the New Deal's NRA codes to solve these new problems and stabilize the tire market, but the tire manufacturing and tire retailing codes were patent failures. Instead of leading to cartelization and higher prices, which is what most scholars assume the NRA codes did, the tire industry codes actually led to even more fragmentation and price-cutting.

Did the National Industrial Recovery Act Foster Collusion? Evidence from the Macaroni Industry

“…Responding to Alexander (1994), Krepps (1997) finds no evidence that the critical concentration ratio actually changed once a consistent set of industries are used. Pamela Pennock (1997) studies the tire industry and finds that the NIRA code actually served to create discord between producers rather than promoting coordination. Finally, George Bittlingmayer (1995) argues that while the codes worked in generating collusion, they actually promoted efficiency in industries with large fixed costs.…”