Why did businesses consolidate into monopolies, pools, trusts, and interlocking directorates during the development of modern economies?

• A. To comply with strict government antitrust regulations
• B. To encourage innovation through increased rivalry
• C. To reduce competition and increase market power
• D. To promote consumer choice and lower prices

Answer: (C)

Verified step by step guidance

1. Understand the historical context: During the development of modern economies, many businesses sought ways to increase their control over markets and reduce the uncertainty caused by intense competition.
2. Recognize the purpose of consolidation: Businesses formed monopolies, pools, trusts, and interlocking directorates primarily to reduce competition among themselves, which allowed them to exert greater market power.
3. Analyze the effects of reduced competition: By consolidating, firms could influence prices, control supply, and increase profits, often at the expense of consumer choice and competitive pricing.
4. Consider government response: These practices eventually led to the introduction of antitrust laws aimed at preventing such market dominance and promoting competition.
5. Conclude that the main motivation for these consolidations was to reduce competition and increase market power, rather than to comply with regulations, encourage rivalry, or promote consumer benefits.