How did John D. Rockefeller horizontally integrate his monopoly in 1889?

John D. Rockefeller horizontally integrated his monopoly in 1889 by systematically buying out or eliminating his competitors to gain control over the oil industry. This strategy led to the dominance of his company, Standard Oil, in the oil market. Here are the logical steps that highlight the process of horizontal integration used by Rockefeller:

1. Lowering Costs: Rockefeller's Standard Oil reduced costs through economies of scale and increased efficiency, enabling them to produce oil at a cheaper rate than competitors. 2. Undercutting Competitors: With lower costs, Standard Oil was able to lower their prices, making it difficult for competitors to keep up. This practice often led competitors to face financial struggles. 3. Buying Competitors: Rockefeller would then buy out these struggling competitors at a reduced price. The offer was often attractive to competitors facing the possibility of bankruptcy. 4. Negotiating with Railroads: Rockefeller also secured favorable rates with the railroads through rebate deals and his control over significant volumes of freight. This made it expensive for competitors to ship their oil, while Standard Oil enjoyed reduced costs. 5. Controlling Output: As Standard Oil bought out more competitors, it began controlling a significant portion of the oil output, allowing the company to influence prices and terms within the market. 6. Establishing a Trust: In order to manage his growing empire and to skirt state laws against owning out-of-state companies, Rockefeller and his associates created a trust. This trust effectively controlled the individual companies as a single entity.

Standard Oil's horizontal integration strategy of systematically reducing competition resulted in a monopoly that held sway over nearly the entire oil industry in the United States by the late 19th century.