Reallocation and Technology: Evidence from the U.S. Steel Industry

Allan Collard-Wexler and Jan De Loecker
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Allan Collard-Wexler: New York University

No 1402, Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies.

Abstract: This paper studies the role of technology and competition in industry-wide productivity growth. We rely on a unique producer-level dataset covering U.S. steel producers between 1963 and 2002 to measure the impact of a drastic new production technology, the minimill, on aggregate productivity. In addition we trace out its associated impact on productivity and market power through increased competition as measured by the reshuffling of market shares over time and across producers. We provide direct evidence that technological change can itself bring about a process of resource reallocation over a long period of time and lead to substantial productivity growth for the industry as a whole. More specifically, we find that the introduction of a new production technology spurred productivity growth through two channels. First, the entry of minimills lead to a slow but steady drop in the market share of the incumbent technology, the vertically integrated producers. Second, while the new technology started out with a significant productivity premium, by the end of the sample minimills and vertically integrated producers are very similar in terms of efficiency. This catching-up process of the incumbents came about from a large within reallocation of resources among vertically integrated plants.

Keywords: Productivity; Technology; Competition; United States (search for similar items in EconPapers)
JEL-codes: D21 D24 L11 L61 O51 (search for similar items in EconPapers)
Date: 2012-09
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https://gceps.princeton.edu/wp-content/uploads/2017/01/230deloecker.pdf

Related works:
Journal Article: Reallocation and Technology: Evidence from the US Steel Industry (2015)
Working Paper: Reallocation and Technology: Evidence From The U.S. Steel Industry (2013)
Working Paper: Reallocation and Technology: Evidence from the U.S. Steel Industry (2013)
Working Paper: Reallocation and technology: evidence from the U.S. steel industry (2013)
Working Paper: Reallocation and technology: evidence from the U.S. steel industry (2013)
Working Paper: Reallocation and Technology: Evidence from the U.S. Steel Industry (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:cepsud:230

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