The Falling Price of Cement in Africa

Prices for several intermediate inputs, including cement, are higher in developingeconomies—particularly in Africa. Combining data from the International Comparison Program with a global directory ofcement plants we estimate an industry equilibrium model to distinguish between drivers of international pricedispersion: demand, costs, conduct, and entry. Developing economies feature both higher marginal costs and highermarkups. African markets are not characterized by higher barriers to entry and, if anything, feature relatively morecompetitive conduct. The small size of many national markets, however, limits entry and competition and explainsmost of the higher markups. Policy implications are discussed.