Rational Atrophy: The Us Steel Industry

51 Pages Posted: 13 Jul 2000 Last revised: 6 Oct 2010

See all articles by Aaron Tornell

Aaron Tornell

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: July 1997

Abstract

During the seventies and eighties the US steel industry received trade protection. However, these rents were not used to improve competitiveness. Instead, they were reflected in higher wages and a greater share of profits invested in sectors not related to steel. Moreover, the steel industry failed to adopt technological innovations on a timely basis and was displaced by the minimills. We rationalize these puzzling outcomes using a dynamic game between workers and firms.

Suggested Citation

Tornell, Aaron, Rational Atrophy: The Us Steel Industry (July 1997). NBER Working Paper No. w6084. Available at SSRN: https://ssrn.com/abstract=226490

Aaron Tornell (Contact Author)

University of California, Los Angeles (UCLA) - Department of Economics ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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