Is there anti-competitive behaviour in the central Canadian cement industry? Testing arbitrage cost hypotheses

Andrew N. Kleit, Halldor P. Palsson

Research output: Contribution to journalArticle

7 Scopus citations

Abstract

Allegations of anti-competitive behaviour in the central Canadian cement industry have focused around the effects of cement producers' buying their downstream distributors. If indeed vertical integration is causing cement prices to rise, the relevant economic theories imply that the arbitrage cost of shipping cement to central Canada is greater than the cost of shipping cement from this region. We investigate this theory by econometrically estimating the relevant arbitrage costs. Our analysis supports the hypothesis that vertical integration has increased barriers to entry for cement in Toronto, but it fails to support a similar hypothesis for Montreal.

Original languageEnglish (US)
Pages (from-to)343-356
Number of pages14
JournalCanadian Journal of Economics
Volume29
Issue number2
DOIs
StatePublished - May 1996

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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