Prices and production cost in aluminium smelting in the short and the long run

Isabel Figuerola-Ferretti

DEE - Working Papers. Business Economics. WB from Universidad Carlos III de Madrid. Departamento de Economía de la Empresa

Abstract: The main objective of this work is to reflect the structural changes that have characterized the aluminium industry over the last few decades. I order to capture the changes in competition I have estimated cost and related it to output prices by illustrating the effect of the prevalent industry risk sharing agreements. I argue that, contrary to what the microeconomic paradigm envisages, in the short run prices mainly determine costs as the consequence of a an exchange pricing system involving contractual risk-sharing arrangements. Costs determine prices only in the long run through investment in new smelting capacity. Previous studies of the aluminium industry had often used unreliable measures of weighted average variable cost. The main contribution of this work lies on the estimation of cost applying the flexible translog framework to a unique set of proprietary data.

Date: 2003-09
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://e-archivo.uc3m.es/rest/api/core/bitstreams ... 0451053bc5ef/content (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cte:wbrepe:wb033909

Access Statistics for this paper

More papers in DEE - Working Papers. Business Economics. WB from Universidad Carlos III de Madrid. Departamento de Economía de la Empresa
Bibliographic data for series maintained by Ana Poveda ().