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Testing for Market Power under the Two-Price System in the U.S. Copper Industry

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Author Info
Claudio Agostini () (ILADES-Georgetown University, Universidad Alberto Hurtado)

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Abstract

Before 1978, most of the U.S. domestic copper production and an important fraction of the imports were traded at a price set by the major U.S. producers. Simultaneously, the rest of the world was trading copper at prices determined in auction markets. This two-price system ended in 1978, when the largest U.S. producers began using the Comex price of refined copper as a benchmark for setting their prices. Using this regime shift I test empirically the competitive behavior of the US copper industry before 1978. The results show that copper prices were close to the ones predicted by a competitive model of the industry.

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Publisher Info
Paper provided by Ilades-Georgetown University, School of Economics and Bussines in its series ILADES-Georgetown University Working Papers with number inv159.

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Length: 34 pages
Date of creation: Mar 2005
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Handle: RePEc:ila:ilades:inv159

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Related research
Keywords: Copper Industry; Market Power;

Find related papers by JEL classification:
D40 - Microeconomics - - Market Structure and Pricing - - - General
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics
L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Vial, Joaquin, 1992. "Copper consumption in the USA: Main determinants and structural changes," Resources Policy, Elsevier, vol. 18(2), pages 107-121, June. [Downloadable!] (restricted)
  2. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-64, July. [Downloadable!] (restricted)
  3. Vives, Xavier, 1986. "Rationing rules and Bertrand-Edgeworth equilibria in large markets," Economics Letters, Elsevier, vol. 21(2), pages 113-116. [Downloadable!] (restricted)
  4. Stewardson, B R, 1970. "The Nature of Competition in the World Market for Refined Copper," The Economic Record, The Economic Society of Australia, vol. 46(114), pages 169-81, June.
  5. Slade, M.E., 1988. "Strategic Pricing With Customer Rationing: The Case Of Primary Metals," UBC Departmental Archives 88-28, UBC Department of Economics.
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  6. Franklin M. Fisher & Paul H. Cootner & Martin N. Baily, 1972. "An Econometric Model of the World Copper Industry," Bell Journal of Economics, The RAND Corporation, vol. 3(2), pages 568-609, Autumn. [Downloadable!] (restricted)
  7. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier. [Downloadable!] (restricted)
  8. James G. MacKinnon & Nancy D. Olewiler, 1980. "Disequilibrium Estimation of the Demand for Copper," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 197-211, Spring. [Downloadable!] (restricted)
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  9. Hubbard, R Glenn & Weiner, Robert J, 1989. "Contracting and Price Adjustment in Commodity Markets: Evidence from Copper and Oil," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 80-89, February. [Downloadable!] (restricted)
  10. Robert H. Porter, 1983. "A Study of Cartel Stability: The Joint Executive Committee, 1880-1886," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 301-314, Autumn. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Juan Pablo Montero & Juan Ignacio Guzmán, 2005. "Welfare-Enhancing Collusion in the Presence of a Competitive Fringe," Documentos de Trabajo 298, Instituto de Economía. Pontificia Universidad Católica de Chile.. [Downloadable!]
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