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Testing for Market Power in the Norwegian Primary Aluminium Industry

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Abstract

The hypothesis of market power in the Norwegian primary aluminium industry is tested using plant-level panel data. Economies of scale are found to be present, and Norwegian aluminium plants charge a procyclical price-cost margin that significantly exceeds zero. Consequently, the simple competitive hypothesis is rejected. The hypothesis that products are differentiated is not rejected, since several plants are found to charge a price permanently over the world market price. A decline in industry concentration internationally, which is assumed to increase the degree of competition, has no significant effect on the price-cost margins of Norwegian plants.

Suggested Citation

  • Kjersti-Gro Lindquist, 1994. "Testing for Market Power in the Norwegian Primary Aluminium Industry," Discussion Papers 132, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:132
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    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp_132.pdf
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    Cited by:

    1. Hagem, Cathrine, 2009. "The clean development mechanism versus international permit trading: The effect on technological change," Resource and Energy Economics, Elsevier, vol. 31(1), pages 1-12, January.
    2. Greaker, Mads, 2003. "Strategic environmental policy; eco-dumping or a green strategy?," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 692-707, May.

    More about this item

    Keywords

    Market power; Differentiated products; Aluminium industry;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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