THE STEEL INDUSTRY: AN ECONOMIC ANALYSIS

This research presents the results of an economic analysis of the steel industry in the United States. These results are presented in discussions related to (1) market structure, industry concentration, barriers to entry, the ability of the industry to control prices, non price competition within the industry, and the effects of foreign competition on the industry, the impact of government on these factors, (2) market segmentation, (3) the incorporation of new technologies and managerial innovations into the industry, and (4) industry profitability.

Market Structure, Industry Concentration, Ability to Control Prices, Non Price Competition, Foreign Competition, and Effects of Government_

Ray Rees, Industrial Economics, 4th ed. (Harmondsworth, England: Penguin Books, 1993), 216.zhe American steel industry is analyzed in each of these contexts in the following discussions.

Seller concentration refers to both the number of firms participating in a market, and the size of those firms in relation to one another. Seller concentration is most often measured within the context of market share, although at times such measurement may reflect aggregate concentration within the contexts of assets, value added, profits, employment, or any of a number of other indicators. Seller concentration within the American steel industry is considered within the context of market share. The American steel industry is divided into two major gro

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rket because of the high barriers to exit that characterize the industry. American steel producers are not able to control prices within the industry. One of the major reasons for this inability to control prices is foreign competition in the American steel market. The American steel industry over the past 15 years has consistently pressured to federal government to either or both impose duties on steel imports or curtail the level of such imports to improve their ability to set prices. While the industry has been successful in obtaining some governmental restrictions on steel imports, such success has not been at the level required to provide the industry with the ability to set prices. The steel industry in the United States refused for decades to either share with customers any costs of wage increases, or attempt to competitively price its products. In their cooperation with the United Steel Workers, the American steel industry helped to make American steel workers the highest paid industrial workers in the United States. Certainly, the wage level in the industry was an important factor in the decline in industry competitiveness against foreign producers; however, the fault lay with both industry and labor.When steel
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Approximate Word count = 2778
Approximate Pages = 11 (250 words per page)

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