Are losers picked? An empirical analysis of capacity divestment and production reallocation in the japanese cement industry

Masato Nishiwaki, Hyoeg Ug Kwon

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

As demand in an industry shrinks, pressure for the reduction of capacity arises. A key issue is whether plants which, from an efficiency perspective, should reduce output in fact do so. Focusing on the Japanese cement industry, we examine whether less efficient plants reduce capacity. We find that less efficient firms are not more likely to reduce capacity than more efficient firms; however, less efficient plants within a multi-plant firm are more likely to reduce capacity than more efficient plants. In addition, we find that this divestment pattern has led to a substantial drop in industry-wide allocative efficiency.

Original languageEnglish
Pages (from-to)430-467
Number of pages38
JournalJournal of Industrial Economics
Volume61
Issue number2
DOIs
Publication statusPublished - 2013 Jun
Externally publishedYes

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ASJC Scopus subject areas

  • Economics and Econometrics
  • Accounting
  • Business, Management and Accounting(all)

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