It was during 1871, that Rockefeller devised his plan for consolidating all the refining firms into one organization, and while there are no written records, Rockefeller and Flagler both admitted some thirty years later that this was indeed when they designed their master plan (Poole 2000). Keith Poole, Professor of Political Science at the University of Houston, writes, "What makes oil stand out is that it happened by design - as the result of a plan formulated by a single person - John D.
His solution was a market with a few vertically integrated firms, "in effect an oligopolistic market," which is what other industrial sectors eventually evolved into (Poole 2000).
Accordingly, the theory of free competition did not work well when there was such a mix of large, medium and small firms, believing that the weak ones drove prices below production costs, thus hurting even large firms (Poole 2000).
Rockefeller believed that because entry costs were so low in oil drilling and refining, the market was glutted with crude oil with high levels of waste.
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