Tariffs, Cartels, Technology, and Growth in the German Steel Industry, 1879 to 1914

Abstract

The steel industry of Wilhelminian Germany is especially known for its tariff protection; its anti-competitive collusion, and the rapid increases of its productivity and its output. This study analyzes the interdependence of these four phenomena. The tariffs and cartels were directly symbiotic in providing protection, which had substantial redistributive effects in favor of larger firms. The restriction of competition by tariffs and cartels may have contributed to the productivity advances of the German steel industry by reducing the riskiness of capital-intensive technologies. Productivity increases made a major contribution to the industry's growth.