Evolution of Vertical Policy: US Steel's Century of Commitment to the Mesabi

In 1894 Andrew Carnegie began a series of investments in the Mesabi Range that continues today by USX Corporation; the result of a sustained commitment unique in the history of U.S. industry. Our study of this evolutionary process suggests that vertical policy was influenced by a changing mix of locational and contractual advantages, political irreversibilities, and stages of technological maturity. Initially, these selection factors encouraged vertical ownership and, as we found, technological innovation. Later, the strategy toward vertical integration changes as we examine the 1986 decision to decouple the Mesabi from downstream facilities. At this point ownership integration is replaced by coordination integration. The picture that emerges is that of an industry experiencing an evolution in vertical policy, consistent with dynamic, efficient outcomes, but with little change in vertical ownership. Copyright 1996 by Oxford University Press.