When a trust is formed, a group gains control of multiple companies to create a monopoly, affecting market competition and potentially harming consumers.
When a trust is formed, a group gains control of multiple companies to effectively create a monopoly in an industry. This practice was common in the late 19th century when owners of independent companies would entrust their stock and control to trustees to operate as a single entity, aiming to dominate the industry.
Trusts were devised to circumvent regulations prohibiting monopolies, allowing the group to control diverse companies collectively. The establishment of a trust consolidated power and control, influencing the market by reducing competition and potentially harming consumers through limited choices and higher prices.
Defenders of trusts argued that they streamlined operations and could bring efficiencies, but critics raised concerns about the negative impact on market competition and the potential exploitation of consumers through monopolistic practices.
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