Rational Atrophy: The US Steel Industry

Aaron Tornell

No 6084, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: During the seventies and eighties the US steel industry received trade protection. However, these rents were not used to improve competitiveness. Instead, they were reflected in higher wages and a greater share of profits invested in sectors not related to steel. Moreover, the steel industry failed to adopt technological innovations on a timely basis and was displaced by the minimills. We rationalize these puzzling outcomes using a dynamic game between workers and firms.

Date: 1997-07
Note: PR
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Working Paper: Rational Atrophy: The U.S. Steel Industry (1997)
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