Import competition in the United States portland cement industry

In this dissertation, I analyze a puzzling phenomenon in industrial organization and international trade: the recent dramatic increase in U.S. imports of cement. Throughout the late nineteen fifties and sixties the import share of U.S. cement consumption was below 2%, consistent with its textbook characterization as an industry regionalized by high transportation costs. Starting in the late nineteen seventies the import share increased to peak at nearly 20% in the late eighties.; In order to explain this phenomenon, I collected an unusually detailed data set on importing and the domestic industry. I then performed a descriptive analysis of importing, pricing and capacity utilization in a broad set of U.S. regions. Unexpectedly, excess demand and international factors were found to overexplain importing, predicting that a larger set of regions, than actually occurred, should have been importing. Introducing detailed local supply conditions corrected this only slightly suggesting some currently unobservable local heterogeneity was contributing to the wide variation in import shares across regions. Estimates of a positive relationship between capacity utilization and import prices suggested imported cement now substitutes for, rather than just supplements, domestic production.; In the second half of the dissertation, I estimated a structural model of the U.S. cement industry. The engineering characteristics of the plants were systematically integrated into the modelling and estimation, requiring the use of a generalized incompletely ordered probit. Measures of plant heterogeneity and of locational rents were included in the specifications. Estimates of the short run cost function parameters were obtained and discussed.