Rational Atrophy: The US Steel Industry
AbstractDuring 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.
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Date of creation: Jul 1997
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- Aaron Tornell, 1997. "Rational Atrophy: The U.S. Steel Industry," Harvard Institute of Economic Research Working Papers 1806, Harvard - Institute of Economic Research.
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