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

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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.

Suggested Citation

  • Claudio Agostini, 2005. "Testing for Market Power under the Two-Price System in the U.S. Copper Industry," ILADES-UAH Working Papers inv159, Universidad Alberto Hurtado/School of Economics and Business.
    • Handle: RePEc:ila:ilades:inv159
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    More about this item

    Keywords

    Copper Industry; Market Power;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - 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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