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Cement in Central America: Global players in a local industry

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  • Raventós, Pedro
  • Zolezzi, Sandro

Abstract

The cement industry provides an ideal setting to explore how contact of firms across markets can reduce rivalry and how this contact might create value added for multinational investment. This note guides the instructor on how to use this case in class. The discussion is organized around three pastures. The first reviews the acquisition of cement assets in Central America by multinationals, analyzes the evolution of capacity and prices, and determines the level of cost asymmetry in each country. The second pasture introduces a simple model that shows how capacity and cost asymmetries affect the viability of cooperative pricing. The third pasture analyzes how contact across the Central American markets by the major multinational cement firms may enhance cooperative pricing and explores how this contact might explain the firms' investment in the region.

Suggested Citation

  • Raventós, Pedro & Zolezzi, Sandro, 2016. "Cement in Central America: Global players in a local industry," Journal of Business Research, Elsevier, vol. 69(2), pages 395-399.
    • Handle: RePEc:eee:jbrese:v:69:y:2016:i:2:p:395-399
    DOI: 10.1016/j.jbusres.2015.06.044
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    References listed on IDEAS

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    1. Pankaj Ghemawat & Catherine Thomas, 2008. "Strategic Interaction Across Countries and Multinational Agglomeration: An Application to the Cement Industry," Management Science, INFORMS, vol. 54(12), pages 1980-1996, December.
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    4. Levitan, Richard & Shubik, Martin, 1972. "Price Duopoly and Capacity Constraints," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(1), pages 111-122, February.
    5. Compte, Olivier & Jenny, Frederic & Rey, Patrick, 2002. "Capacity constraints, mergers and collusion," European Economic Review, Elsevier, vol. 46(1), pages 1-29, January.
    6. B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
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    Cited by:

    1. Effnu Subiyanto, 2020. "The Relationship of Cement Consumption and Economic Growth: An Updated Approach," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 280-295.
    2. Cruz-García, Paula & Fernández de Guevara, Juan & Maudos, Joaquín, 2021. "Bank competition and multimarket contact intensity," Journal of International Money and Finance, Elsevier, vol. 113(C).

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