Building New Plants or Entering by Acquisition? Estimation of an Entry Model for U.S. Cement Industry

Perez-Saiz, Hector

doi:10.2139/ssrn.1592998

Cited by 2 publications

(1 citation statement)

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“…() extend the Markov framework developed in Ryan () to include a competitive fringe of importers. Perez‐Saiz () also draws on Ryan () but this time allows for mergers and acquisitions. These papers note that the U.S. market structure at the district level has a lot of inertia, and Ryan () introduces the possibility of heterogeneous firms, but the estimation results show no significant differences in cost functions across firms.…”

Section: Relevant Literature and Simple Model Calibrationmentioning

confidence: 99%

Capacity Investment under Demand Uncertainty: The Role of Imports in the U.S. Cement Industry

Meunier

Ponssard

Thomas

2015

Economics Manag Strategy

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Demand uncertainty is thought to influence irreversible capacity decisions. Suppose that local demand can be sourced from domestic (rigid) production or from (flexible) imports. This paper shows that the optimal domestic capacity is either increasing or decreasing with demand uncertainty, depending on the relative level of the costs of domestic production and imports. We test this relationship with data from the U.S. cement industry, in which the difference in marginal cost between domestic production and imports varies across local U.S. markets because cement is costly to transport over land. Industry data for 1999 to 2010 are consistent with the predictions of the model. The introduction of two technologies to the production set-one rigid and one flexible-is crucial to understanding the relationship between capacity choice and uncertainty in this industry because there is no relationship between these two variables in aggregated U.S. data. Our analysis reveals that the relationship is negative in coastal districts, and significantly more positive in landlocked districts.

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Section: Relevant Literature and Simple Model Calibrationmentioning

confidence: 99%

Capacity Investment under Demand Uncertainty: The Role of Imports in the U.S. Cement Industry

Meunier

Ponssard

Thomas

2015

Economics Manag Strategy

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

2010

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The research program of the Center for Economic Studies (CES) produces a wide range of economic analyses to improve the statistical programs of the U.S. Census Bureau. Many of these analyses take the form of CES research papers. The papers have not undergone the review accorded Census Bureau publications and no endorsement should be inferred. Any opinions and conclusions expressed herein are those of the author(s) and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. Republication in whole or part must be cleared with the authors.To obtain information about the series, see www.ces.census.gov or contact Cheryl Grim, Editor,

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Building New Plants or Entering by Acquisition? Estimation of an Entry Model for U.S. Cement Industry

Cited by 2 publications

References 42 publications

Capacity Investment under Demand Uncertainty: The Role of Imports in the U.S. Cement Industry

Capacity Investment under Demand Uncertainty: The Role of Imports in the U.S. Cement Industry

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

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