Reallocation and Technology: Evidence from the US Steel Industry
Allan Collard-Wexler, Jan De Loecker
American Economic Review · 2015 · Volume 105 · Issue 1
Abstract
We measure the impact of a drastic new technology for producing steel—the minimill—on industry-wide productivity in the US steel industry, using unique plant-level data between 1963 and 2002. The sharp increase in the industry's productivity is linked to this new technology through two distinct mechanisms: (i) the mere displacement of the older technology (vertically integrated producers) was responsible for a third of the increase in the industry's productivity, and (ii) increased competition, due the minimill expansion, drove a productivity resurgence at the surviving vertical integrated producers and, consequently, the productivity of the industry as a whole. (JEL D24, L13, L23, L61, M11, O31, O33)
Keywords
Production, Cost, Capital, Total Factor, and Multifactor Productivity, Capacity, Oligopoly and Other Imperfect Markets, Organization of Production, Metals and Metal Products, Cement, Glass, Ceramics, Production Management, Innovation and Invention: Processes and Incentives, Technological Change: Choices and Consequences, Diffusion Processes
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