Game Theory and the Farmers Federation of Western North Carolina

Abstract

This case uses early 20th-century Southern Appalachia to explore the impact of cooperative marketing and antitrust exemption. Antitrust legislation in response to the age of the Robber Baron, namely the Sherman Antitrust Act and the Clayton Act, revolutionized the United States’ approach to industrial organization. However, various exemptions to these antitrust laws were granted in subsequent years. A look at the exemptions granted in the agricultural industry provides insight into early 20th-century life in Southern Appalachia as well as the changing industrial landscape of the United States as a whole. In addition, the case introduces pricing strategy and basic game theory. Antitrust exemption can allow for what is essentially a legally functioning cartel. This presents an example for students to see unique game-theoretical implications in application.

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