IDEAS home Printed from https://ideas.repec.org/a/ucp/jpolec/v104y1996i2p241-66.html
   My bibliography  Save this article

Localized Competition and the Aggregation of Plant-Level Increasing Returns: Blast Furnaces, 1929-1935

Author

Listed:
  • Bertin, Amy L
  • Bresnahan, Timothy F
  • Raff, Daniel M G

Abstract

A recent empirical literature has shaken economists' confidence in the value of aggregate (industry-level) data to illuminate production relationships. But the statistical finding 'you can't aggregate,' however well documented, is not an economic explanation. Plant-level relationships do aggregate in Depression-era blast furnace operations despite the presence of very substantial interplant heterogeneity, the most common economic cause of nonaggregability. The economic explanation of this lies in poor short-run substitutability of one plant's output for another's. Substitutability determines the importance of composition effects in understanding aggregate time series, constrains the potential cleansing effects of recessions, and therefore influences industry evolution quite broadly. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Bertin, Amy L & Bresnahan, Timothy F & Raff, Daniel M G, 1996. "Localized Competition and the Aggregation of Plant-Level Increasing Returns: Blast Furnaces, 1929-1935," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 241-266, April.
    • Handle: RePEc:ucp:jpolec:v:104:y:1996:i:2:p:241-66
    DOI: 10.1086/262024
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/262024
    File Function: full text
    Download Restriction: Access to full text is restricted to subscribers. See http://www.journals.uchicago.edu/JPE for details.
    File URL: https://libkey.io/10.1086/262024?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fay, Jon A & Medoff, James L, 1985. "Labor and Output over the Business Cycle: Some Direct Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 638-655, September.
    2. Bernanke, Ben S & Parkinson, Martin L, 1991. "Procyclical Labor Productivity and Competing Theories of the Business Cycle: Some Evidence from Interwar U.S. Manufacturing Industries," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 439-459, June.
    3. Dennis W. Carlton, 1991. "The Theory of Allocation and Its Implications for Marketing and Industrial Structure," NBER Working Papers 3786, National Bureau of Economic Research, Inc.
    4. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    5. Hollis B. Chenery, 1949. "Engineering Production Functions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 63(4), pages 507-531.
    6. Bernanke, Ben S, 1986. "Employment, Hours, and Earnings in the Depression: An Analysis of EightManufacturing Industries," American Economic Review, American Economic Association, vol. 76(1), pages 82-109, March.
    7. Robert H Mcguckin, 1993. "The Importance of Establishment Data in Economic Research," Working Papers 93-10, Center for Economic Studies, U.S. Census Bureau.
    8. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 819-863.
    9. Caballero, Ricardo J & Hammour, Mohamad L, 1994. "The Cleansing Effect of Recessions," American Economic Review, American Economic Association, vol. 84(5), pages 1350-1368, December.
    10. Rosse, James N, 1970. "Estimating Cost Function Parameters without Using Cost Data: Illustrated Methodology," Econometrica, Econometric Society, vol. 38(2), pages 256-275, March.
    11. Hamermesh, Daniel S, 1989. "Labor Demand and the Structure of Adjustment Costs," American Economic Review, American Economic Association, vol. 79(4), pages 674-689, September.
    12. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1989. "The Growth and Failure of U. S. Manufacturing Plants," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(4), pages 671-698.
    13. Carlton, Dennis W, 1991. "The Theory of Allocation and Its Implications for Marketing and Industrial Structure: Why Rationing Is Efficient," Journal of Law and Economics, University of Chicago Press, vol. 34(2), pages 231-262, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guimarães Barbosa, Evaldo, 2016. "External determinants of small business survival – The overwhelming impact of GDP and other environmental factors and a new proposed framework," MPRA Paper 73346, University Library of Munich, Germany.
    2. Yi-Chen Lin & Tai-Hsin Huang, 2012. "Creative destruction over the business cycle: a stochastic frontier analysis," Journal of Productivity Analysis, Springer, vol. 38(3), pages 285-302, December.
    3. Chicu, Mark & Vickers, Chris & Ziebarth, Nicolas L., 2013. "Cementing the case for collusion under the National Recovery Administration," Explorations in Economic History, Elsevier, vol. 50(4), pages 487-507.
    4. Uchida, Hirofumi & Miyakawa, Daisuke & Hosono, Kaoru & Ono, Arito & Uchino, Taisuke & Uesugi, Iichiro, 2013. "Natural Disaster and Natural Selection," Working Paper Series 25, Center for Interfirm Network, Institute of Economic Research, Hitotsubashi University.
    5. Maliranta, Mika, 2001. "Productivity Growth and Micro-level Restructuring. Finnish experiences during the turbulent decades," Discussion Papers 757, The Research Institute of the Finnish Economy.
    6. Hiroshi Ohashi & Tsuyoshi Nakamura, 2005. "Technology Adoption, Learning by Doing, and Productivity: A Study from Steel Refining Furnaces," 2005 Meeting Papers 28, Society for Economic Dynamics.
    7. Barlevy, Gadi, 2003. "Credit market frictions and the allocation of resources over the business cycle," Journal of Monetary Economics, Elsevier, vol. 50(8), pages 1795-1818, November.
    8. Uchida, Hirofumi & Miyakawa, Daisuke & Hosono, Kaoru & Ono, Arito & Uchino, Taisuke & Uesugi, Iichiro, 2015. "Financial shocks, bankruptcy, and natural selection," Japan and the World Economy, Elsevier, vol. 36(C), pages 123-135.
    9. Tsuyoshi Nakamura & Hiroshi Ohashi, 2008. "Effects Of Technology Adoption On Productivity And Industry Growth: A Study Of Steel Refining Furnaces," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 470-499, September.
    10. Antle, John M., 1998. "No Such Thing as a Free Safe Lunch: The Cost of Food Safety Regulation in the Meat Industry," Research Discussion Papers 256822, Montana State University, Department of Agricultural Economics and Economics, Trade Research Center.
    11. Nicolas L. Ziebarth, 2013. "Identifying the Effects of Bank Failures from a Natural Experiment in Mississippi during the Great Depression," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(1), pages 81-101, January.
    12. Hun Jun Lee & Jeong-Dong Lee & Chulwoo Baek, 2017. "Productivity dynamics and the cleansing effect of two recessions: Evidence from the manufacturing sector in Korea," Pacific Economic Review, Wiley Blackwell, vol. 22(4), pages 677-701, October.
    13. Saini, Seema & Ahmad, Wasim & Uddin, Gazi Salah, 2024. "Do recessions induce Schumpeterian creative destruction? Micro Evidence from India," Emerging Markets Review, Elsevier, vol. 59(C).
    14. Tsuyoshi Nakamura & Hiroshi Ohashi, 2005. "Technology Adoption, Learning by Doing, and Productivity: A Study of Steel Refining Furnaces," CIRJE F-Series CIRJE-F-368, CIRJE, Faculty of Economics, University of Tokyo.
    15. J. Beaulieu & Joe Mattey, 1998. "The Workweek of Capital and Capital Utilization in Manufacturing," Journal of Productivity Analysis, Springer, vol. 10(2), pages 199-223, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lapatinas, Athanasios, 2009. "Labour adjustment costs: Estimation of a dynamic discrete choice model using panel data for Greek manufacturing firms," Labour Economics, Elsevier, vol. 16(5), pages 521-533, October.
    2. Cooper, Russell & Haltiwanger, John, 1993. "The Aggregate Implications of Machine Replacement: Theory and Evidence," American Economic Review, American Economic Association, vol. 83(3), pages 360-382, June.
    3. Scott Schuh & Robert K Triest, 1998. "Job Reallocation And The Business Cycle: New Facts An Old Debate," Working Papers 98-11, Center for Economic Studies, U.S. Census Bureau.
    4. Catherine Armington & Zoltan Acs, 2000. "Differences in Job Growth and Persistence in Services and Manufacturing," Working Papers 00-04, Center for Economic Studies, U.S. Census Bureau.
    5. Scott Schuh & Robert K. Triest, 1998. "Job reallocation and the business cycle: new facts for an old debate," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 42(Jun), pages 271-357.
    6. repec:eee:labchp:v:3:y:1999:i:pb:p:2711-2805 is not listed on IDEAS
    7. Dunne, Timothy & Merrell, David R., 2001. "Gross employment flows in U.S. coal mining," Economics Letters, Elsevier, vol. 71(2), pages 217-224, May.
    8. Abele, Christian & Bénassy-Quéré, Agnès & Fontagné, Lionel, 2024. "The impact of financial tightening on firm productivity: Maturity matters," Journal of International Money and Finance, Elsevier, vol. 144(C).
    9. Wheeler, Christopher H., 2007. "Job Flows And Productivity Dynamics: Evidence From U.S. Manufacturing," Macroeconomic Dynamics, Cambridge University Press, vol. 11(2), pages 175-201, April.
    10. John Haltiwanger & Russell Cooper & Laura Power, 1999. "Machine Replacement and the Business Cycle: Lumps and Bumps," American Economic Review, American Economic Association, vol. 89(4), pages 921-946, September.
    11. Jonas D. M. Fisher & Jeffrey R. Campbell, 2000. "Aggregate Employment Fluctuations with Microeconomic Asymmetries," American Economic Review, American Economic Association, vol. 90(5), pages 1323-1345, December.
    12. Argente, David & Lee, Munseob & Moreira, Sara, 2018. "Innovation and product reallocation in the great recession," Journal of Monetary Economics, Elsevier, vol. 93(C), pages 1-20.
    13. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Survival of the best fit: Exposure to low-wage countries and the (uneven) growth of U.S. manufacturing plants," Journal of International Economics, Elsevier, vol. 68(1), pages 219-237, January.
    14. Douglas W Dwyer, 1995. "Technology Locks, Creative Destruction And Non-Convergence In Productivity Levels," Working Papers 95-6, Center for Economic Studies, U.S. Census Bureau.
    15. Lucia Foster & Cheryl Grim & John Haltiwanger, 2016. "Reallocation in the Great Recession: Cleansing or Not?," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 293-331.
    16. Riley, Rebecca & Rosazza-Bondibene, Chiara & Young, Garry, 2015. "The UK productivity puzzle 2008-13: evidence from British businesses," Bank of England working papers 531, Bank of England.
    17. Victor Aguirregabiria & Cesar Alonso-Borrego, 2014. "Labor Contracts And Flexibility: Evidence From A Labor Market Reform In Spain," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 930-957, April.
    18. R. Jason Faberman, 2003. "Job Flows and Establishment Characteristics: Variations Across U.S. Metropolitan Areas," William Davidson Institute Working Papers Series 2003-609, William Davidson Institute at the University of Michigan.
    19. James Bergin & Dan Bernhardt, 2008. "Industry dynamics with stochastic demand," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 41-68, March.
    20. Jeroen Van den bosch & Stijn Vanormelingen, 2023. "Productivity growth over the business cycle: cleansing effects of recessions," Small Business Economics, Springer, vol. 60(2), pages 639-657, February.
    21. Edoardo M. Acabbi & Ettore Panetti & Alessandro Sforza, 2019. "The Financial Channels of Labor Rigidities: Evidence from Portugal," GEE Papers 0138, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2019.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jpolec:v:104:y:1996:i:2:p:241-66. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JPE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.