Steel Production and Resource Allocation: An Empirical Study

Abstract

THE U.S. steel industry has some interesting characteristics which have made itself a favored object of inquiry in many recent economic studies. The market structure of the industry, its pricing practices, the high degree of vertical integration in the production process, the long run existence of apparent excess capacities, the intrinsic nature of economies of scale in its production operations, etc., are but few of the many examples. Among them, the most interesting ones are perhaps those related to production: the choice of production techniques and the economies of scale, the effects of technological changes on input requirements and, consequently, on resource allocation. The purpose of this paper is to construct a production model of steelmaking which is capable of reflecting changes in production techniques and input requirements, and to use this model to study the impact of technological and environmental changes on the industrial performance. The first part of the paper gives a brief description o...