Friday, June 3, 2022

The Evolution of Concentration and Markups in the United States Cement Industry

The Evolution of Concentration and Markups in the United States Cement Industry

 

Nathan Miller

Georgetown University - Robert Emmett McDonough School of Business

Matthew Osborne

University of Toronto at Mississauga - Department of Management

Gloria Sheu

Board of Governors of the Federal Reserve System

Gretchen Sileo

Georgetown University

 

Abstract

We examine local market concentration and markups in the United States cement industry over 1974-2016. We estimate a model in which buyers use a second-score auction to procure cement from spatially differentiated plants. The model matches aggregated outcomes in the data, and the implied transportation costs and shipping distances are consistent with external sources. We infer local market concentration and markups from the model. At the county-level, the average HHI rises from 1,890 to 2,800 during the sample period. Average markups increase modestly, but prices do not rise. We attribute these changes to a technological innovation---the precalciner kiln---that lowered marginal costs, increased plant-level capacities, and also contributed to an industry shakeout in which many plants closed.

https://lawprofessors.typepad.com/antitrustprof_blog/2022/06/the-evolution-of-concentration-and-markups-in-the-united-states-cement-industry.html

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