Ownership and Productivity in Vertically Integrated Firms: Evidence from the Chinese Steel Industry

Loren Brandt (), Feitao Jiang, Yao Luo and Yingjun Su
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Feitao Jiang: IIE, Chinese Academy of Social Sciences
Yingjun Su: IESR, Jinan University

The Review of Economics and Statistics, 2022, vol. 104, issue 1, 101-115

Abstract: We study productivity differences in vertically integrated steel facilities using equipment-level information on inputs and output for each of the main stages in the value chain. We obtain stage-level productivity estimates by estimating a multistage production system and then integrate them into estimates for integrated facilities. At this level, we do not find statistically significant differences in productivity by ownership. This conceals important differences upstream and downstream in the value chain: private firms outperform in pig iron and steelmaking but lag in sintering. Inferior access to higher-quality raw materials and use of less automated technology are likely sources of these differences.

Date: 2022
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Working Paper: Ownership and Productivity in Vertically-Integrated Firms: Evidence from the Chinese Steel Industry (2019)
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