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The Determinants of Plant Exit: the Evolution of the U.S. Refining Industry

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  • David W. Meyer

    (US FTC)

  • Christopher T. Taylor

    (US FTC)

Abstract

This paper analyzes the exit and expansion of U.S. petroleum refineries using plant-level data from 1947 to 2013. We find that small refineries and refineries owned by a multi-plant firm are more likely to close. If a multi-plant firm closes a refinery, it closes a smaller one. Unlike previous research, we find no clear relationship between a firm’s share of national refining capacity and the probability of refinery exit. We also find that refineries close when the industry as a whole has low capacity utilization. In total, firms close small, likely inefficient, refineries when refinery utilization is low.

Suggested Citation

  • David W. Meyer & Christopher T. Taylor, 2018. "The Determinants of Plant Exit: the Evolution of the U.S. Refining Industry," Journal of Industry, Competition and Trade, Springer, vol. 18(4), pages 429-448, December.
    • Handle: RePEc:kap:jincot:v:18:y:2018:i:4:d:10.1007_s10842-018-0273-8
    DOI: 10.1007/s10842-018-0273-8
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    References listed on IDEAS

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    Cited by:

    1. Ruble, Isabella, 2019. "The U.S. crude oil refining industry: Recent developments, upcoming challenges and prospects for exports," The Journal of Economic Asymmetries, Elsevier, vol. 20(C).

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    More about this item

    Keywords

    Refining; Multinomial Probit; Plant exit; Multi-plant coordination;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

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