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Competition and Productivity: Evidence from the Post WWII U.S. Cement Industry

Listed author(s):
  • Timothy Dunne
  • Shawn Klimek
  • James Schmitz, Jr.

In the mid 1980s, the U.S. cement industry faced a large increase in foreign competition. Foreign cement producers began offering cement at very large discounts on U.S. prices. We show that productivity (measured by TFP) in the industry was falling during the 1960s and 1970s, but that following the increase in competition, productivity has reversed course and is growing strongly. When foreign competition was weak, productivity fell. When it was strong, productivity grew robustly. We explore the reasons for the large productivity increase. We argue that a large share of the productivity gains resulted from significant changes in management practices at plants.

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File URL: ftp://ftp2.census.gov/ces/wp/2010/CES-WP-10-29.pdf
File Function: First version, 2010
Download Restriction: no

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 10-29.

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Length: 46 pages
Date of creation: Sep 2010
Handle: RePEc:cen:wpaper:10-29
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  1. Allan Collard-Wexler, 2006. "Plant Turnover and Demand Fluctuations in the Ready-Mix Concrete Industry," Working Papers 06-08, Center for Economic Studies, U.S. Census Bureau.
  2. Muendler, Marc-Andreas, 2004. "Trade, Technology, and Productivity: A Study of Brazilian Manufacturers, 1986-1998," University of California at San Diego, Economics Working Paper Series qt6m96c2r7, Department of Economics, UC San Diego.
  3. Thomas J. Holmes & David K. Levine & James A. Schmitz, 2008. "Monopoly and the incentive to innovate when adoption involves switchover disruptions," Staff Report 402, Federal Reserve Bank of Minneapolis.
  4. Fernandes, Ana M., 2003. "Trade policy, trade volumes, and plant-level productivity in Colombian manufacturing industries," Policy Research Working Paper Series 3064, The World Bank.
  5. Nick Bloom & John Van Reenen, 2006. "Measuring and Explaining Management Practices Across Firms and Countries," CEP Discussion Papers dp0716, Centre for Economic Performance, LSE.
  6. Nicholas Bloom & Mirko Draca & John Van Reenen, 2011. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," CEP Discussion Papers dp1000, Centre for Economic Performance, LSE.
  7. Mary Amiti & Jozef Konings, 2007. "Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia," American Economic Review, American Economic Association, vol. 97(5), pages 1611-1638, December.
  8. José E. Galdón-Sánchez & James A. Schmitz Jr., 2002. "Competitive Pressure and Labor Productivity: World Iron-Ore Markets in the 1980's," American Economic Review, American Economic Association, vol. 92(4), pages 1222-1235, September.
  9. Nicholas Bloom & Benn Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2011. "Does Management Matter? Evidence from India," CEP Discussion Papers dp1042, Centre for Economic Performance, LSE.
  10. James A. Schmitz Jr., 2005. "What Determines Productivity? Lessons from the Dramatic Recovery of the U.S. and Canadian Iron Ore Industries Following Their Early 1980s Crisis," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 582-625, June.
  11. Donald A. Hay, 2015. "The Post 1990 Brazilian Trade Liberalization and the Performance of Large Manufacturing Firms: Productivity, Market Share and Profits," Discussion Papers 0070, Instituto de Pesquisa Econômica Aplicada - IPEA.
  12. Førsund, Finn R. & Hjalmarsson, Lennart, 1983. "Technical Progress and Structural Change in the Swedish Cement Industry 1955 - 1979," Working Paper Series 98, Research Institute of Industrial Economics.
  13. Kumbhakar, Subal C. & Heshmati, Almas & Hjalmarsson, Lennart, 1997. "Temporal patterns of technical efficiency: Results from competing models," International Journal of Industrial Organization, Elsevier, vol. 15(5), pages 597-616, August.
  14. Kumbhakar, Subal C & Heshmati, Almas & Hjalmarsson, Lennart, 1999. " Parametric Approaches to Productivity Measurement: A Comparison among Alternative Models," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(3), pages 405-424, September.
  15. Hector Perez-Saiz, 2011. "Building New Plants or Entering by Acquisition? Estimation of an Entry Model for the U.S. Cement Industry," Staff Working Papers 11-1, Bank of Canada.
  16. Victor Gomes & Arilton Teixeira & Benjamin Bridgman, 2008. "The Threat of Competition Enhances Productivity," 2008 Meeting Papers 302, Society for Economic Dynamics.
  17. Thomas J. Holmes & James A. Schmitz, 2001. "Competition at work : railroads vs. monopoly in the U.S. shipping industry," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-29.
  18. Petia Topalova, 2004. "Trade Liberalization and Firm Productivity; The Case of India," IMF Working Papers 04/28, International Monetary Fund.
  19. Alberto Salvo, 2010. "Inferring market power under the threat of entry: the case of the Brazilian cement industry," RAND Journal of Economics, RAND Corporation, vol. 41(2), pages 326-350.
  20. Das, Sanghamitra, 1991. "Estimation of Fuel Coefficients of Cement Production: A Fixed-Effects Approach to Nonlinear Regression," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(4), pages 469-474, October.
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