Alcoa monopoly and price fixing with Dow Chemical

George Kenney's doctoral thesis (under Joel Clark, 1975) showed Alcoa and Dow had matched aluminum/magnesium prices from 1945 to 1975, evidence of a market-division agreement: Alcoa stays out of magnesium, Dow stays out of aluminum.

There's one plot in here about Alcoa's command of the market. Alcoa had a monopoly. They had 100% of the market for bauxite in the world. They were a true monopoly in the aluminum business. George Kenney, who was Joel Clark's first doctoral student, did his doctoral thesis on aluminum and magnesium and showed pretty convincingly that Alcoa and Dow had fixed prices after World War II. Alcoa said, we won't go into the magnesium business if you stay out of the aluminum business. So Dow took over magnesium and had a monopoly there. You could match their prices over time from 1945 up until 1975 when George did his thesis.

Tom references how trust-busters broke up Alcoa, spinning off the Aluminum Company of Canada (Alcan). Mention of Alcoa's monopoly position prior to that breakup.

There are hundreds of steel companies. How many aluminum companies can you think of? You can think of one — Alcoa. There are other aluminum companies. You've heard of Kaiser Aluminum, maybe — if you're from the West Coast you would have heard of Kaiser Aluminum. You've heard of Reynolds Aluminum. You might know how Reynolds Aluminum got started: it's the same Reynolds as Reynolds Tobacco. They needed something to wrap their tobacco in, so they started making a little foil around 1900 and they grew the aluminum business separate of the tobacco. It's the same R.J. Reynolds family out of Richmond, and that's the headquarters of Reynolds. There's Alcan, a little company of Canada, which is actually a spinoff — trust busters broke up Alcoa. I told you how Alcoa, Boeing, and Pratt & Whitney were all once together, and at some point they broke them up, and they also broke off the Aluminum Company of Canada, Alcan. Alcoa just had a monopoly. Charles Martin Hall was the founder of Alcoa, but Paul Héroult in France had also discovered the same thing and just got to the patent office a little bit too late. Hall beat him. Héroult's company was Pechiney in France, and Pechiney was just bought by somebody else. You can't even name very many aluminum companies. I can't name more than a dozen, and I've been in this business longer than you've been alive. But I could rattle off the names of dozens of steel companies.