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Ownership and Productivity in Vertically Integrated Firms: Evidence from the Chinese Steel Industry

Author

Listed:
  • Loren Brandt

    (University of Toronto)

  • Feitao Jiang

    (IIE, Chinese Academy of Social Sciences)

  • Yao Luo

    (University of Toronto)

  • Yingjun Su

    (IESR, Jinan University)

Abstract

We study productivity differences in vertically integrated steel facilities using equipment-level information on inputs and output for each of the main stages in the value chain. We obtain stage-level productivity estimates by estimating a multistage production system and then integrate them into estimates for integrated facilities. At this level, we do not find statistically significant differences in productivity by ownership. This conceals important differences upstream and downstream in the value chain: private firms outperform in pig iron and steelmaking but lag in sintering. Inferior access to higher-quality raw materials and use of less automated technology are likely sources of these differences.

Suggested Citation

  • Loren Brandt & Feitao Jiang & Yao Luo & Yingjun Su, 2022. "Ownership and Productivity in Vertically Integrated Firms: Evidence from the Chinese Steel Industry," The Review of Economics and Statistics, MIT Press, vol. 104(1), pages 101-115, March.
    • Handle: RePEc:tpr:restat:v:104:y:2022:i:1:p:101-115
    DOI: 10.1162/rest_a_00923
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    Cited by:

    1. Li, Haoyang & Wu, Nan & Zhao, Jinhua, 2025. "Markup dispersion, industry coverage and the cost of environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).
    2. Lu, M. & Pollitt, M. G., 2025. "Will High Carbon Prices Reduce Fossil Fuel Use in China? Evidence from Price Elasticity Estimates using Firm Data," Cambridge Working Papers in Economics 2527, Faculty of Economics, University of Cambridge.
    3. Duan, Haoran & Yu, Shiwei & Geng, Haopeng & Cheng, Jinhua, 2025. "Economic vulnerability and resilience analyses for China's iron and steel industry: Insights from COVID-19," Resources Policy, Elsevier, vol. 103(C).
    4. Anton Yang & Jianwei Ai & Costas Arkolakis, 2025. "A Geospatial Approach to Measuring Economic Activity," NBER Working Papers 33619, National Bureau of Economic Research, Inc.
    5. Sun, Puyang & Ma, Kewei & Su, Li, 2024. "Import licenses, intermediaries, and price pass-through: Evidence from the Chinese steel market," Journal of International Money and Finance, Elsevier, vol. 149(C).
    6. Loren Brandt & Feitao Jiang & Yao Luo & Yingjun Su, 2026. "The Geography of Market Power: Evidence from the Chinese Steel Industry," Working Papers tecipa-820, University of Toronto, Department of Economics.

    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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