Technology and Market Power: The United States Cement Industry, 1974-2019

60 Pages Posted: 5 Apr 2022 Last revised: 29 Jun 2023

See all articles by Nathan Miller

Nathan Miller

Georgetown University - 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

Temple University - Department of Economics; Temple University

Date Written: June 29, 2023

Abstract

We examine the evolution of market power in the cement industry over more than four decades using a structural model of procurement. The model matches aggregated outcomes in the data, and implies transportation costs, shipping distances, and demand elasticities that are consistent with external sources. Evaluating county-level outcomes throughout the contiguous United States, we find that market concentration and markups increase but that prices do not rise. We attribute these patterns to a technological innovation---the precalciner kiln---that lowered variable costs, increased plant-level capacities and economies of scale, and contributed to an industry shakeout in which many plants closed.

Keywords: markups, concentration, market power, economies-of-scale, antitrust, cement

JEL Classification: L11, L13, L41, L61

Suggested Citation

Miller, Nathan and Osborne, Matthew and Sheu, Gloria and Sileo, Gretchen, Technology and Market Power: The United States Cement Industry, 1974-2019 (June 29, 2023). Georgetown McDonough School of Business Research Paper No. 4041168, Available at SSRN: https://ssrn.com/abstract=4041168 or http://dx.doi.org/10.2139/ssrn.4041168

Nathan Miller (Contact Author)

Georgetown University - McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Matthew Osborne

University of Toronto at Mississauga - Department of Management ( email )


Canada

Gloria Sheu

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Gretchen Sileo

Temple University - Department of Economics ( email )

Philadelphia, PA 19122
United States

Temple University ( email )

Philadelphia, PA
United States

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