Market structure and resilience: Evidence from potash mine disasters

Hinnerk Gnutzmann, Oskar Kowalewski () and Piotr Śpiewanowski

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Abstract: What drives the resilience of markets to disasters? We study syndicates, a form of legal cartel that assigns market share based on production capacity. This creates incentives for excess capacity investment, and may insulate the market from the impact of extreme events. The potash industry, controlled by a syndicate and subject to mine disasters generating exogenous capacity shocks, provides an ideal setting for testing the hypothesis. We find evidence suggesting that even large capacity losses—averaging 3% of global capacity—do not cause production shortfalls or a price response. Such resilience is not observed in more competitive commodity markets.

Date: 2019-08-16
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Published in American Journal of Agricultural Economics, 2019, ⟨10.1093/ajae/aaz041⟩

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Related works:
Journal Article: Market Structure and Resilience: Evidence from Potash Mine Disasters (2020)
Working Paper: Market Structure and Supply Shocks: Evidence from Mining Disasters (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02499256

DOI: 10.1093/ajae/aaz041

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