SMU SOE Seminar Series (March 7, 2025): Productivity and Competition in a Declining Industry

TOPIC:

ABSTRACT

How does a persistent decline in demand affect the productivity of an industry? What is the impact of cartel on it if it were allowed? We study these questions by constructing plant-level data on Japan's ready-mix concrete industry for 1993–2020, a period in which demand shrank to a third. After recovering the plant-level productivity adjusting for underutilization, we separately identify the impact of i) declining demand, ii) competition, and iii) the selection resulting from the exit of less productive plants. We show that sharper decline in future demand enhances productivity, while cartel lowers it.

Click here to view the CV.