Mining Surplus: Modeling James a. Schmitz's Link between Competition and Productivity

14 Pages Posted: 18 Oct 2013 Last revised: 30 Oct 2013

See all articles by Jeremy Greenwood

Jeremy Greenwood

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

David Weiss

Tel Aviv University - Eitan Berglas School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 2013

Abstract

James A. Schmitz (2005) documents, in a well-known case study, a dramatic rise in productivity in the U.S. and Canadian iron-ore industry following an increase in competition from Brazil. Prior to the increased competition, the industry was not competitive. Surplus in profits was divided between business and unions. Schmitz attributes the increase in productivity to a change in work practices in the industry, as old negotiated union work rules were abandoned or modified. This research formalizes a mechanism through which a rise in competition can lead to increased productivity in the iron-ore industry.

Suggested Citation

Greenwood, Jeremy and Weiss, David, Mining Surplus: Modeling James a. Schmitz's Link between Competition and Productivity (October 2013). NBER Working Paper No. w19556. Available at SSRN: https://ssrn.com/abstract=2342053

Jeremy Greenwood (Contact Author)

University of Pennsylvania - Department of Economics ( email )

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HOME PAGE: http://jeremygreenwood.net

National Bureau of Economic Research (NBER)

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David Weiss

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel

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