Through the 1970s and 1980s, the U.S. portland cement industry experienced a significant increase in average plant size and market concentration. A simultaneous equation model is developed to examine the effects of plant size and concentration on costs, prices and margins in that industry. The results indicate the presence of significant scale economies, but also show that prices and margins are increasing in concentration. Further analysis shows that almost one third of the cost savings associated with larger plants are passed on to producers through higher margins resulting from concomitant increases in concentration, rather than to consumers as lower prices.
ASJC Scopus subject areas
- Economics and Econometrics
- Strategy and Management
- Organizational Behavior and Human Resource Management
- Management of Technology and Innovation