The timing of capacity expansions as barriers to mobility in the United Kingdom’s petroleum refining industry between 1948 and 1998

Arrieta Paredes, Mary-Paz (2004): The timing of capacity expansions as barriers to mobility in the United Kingdom’s petroleum refining industry between 1948 and 1998.

Abstract

We try to determine whether capacity expansion timing in oligopoly among incumbents can be considered mobility deterring. We study the United Kingdom ´s petroleum refining industry between 1948 and 1998. Using tobit models, evidence is conclusive about accommodation among incumbents. We infer that excess capacity in this industry, instead of being a tool for strategic deterrence, has been the result of unexpected demand variability.

• Item Type: MPRA Paper
• Language: English
• Keywords: Capacity expansion timing; Mobility deterrence
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L7 - Industry Studies: Primary Products and Construction > L71 - Mining, Extraction, and Refining: Hydrocarbon Fuels

References

REFERENCES

Dixit, A., March-1980, “The role of investment in entry deterrence”, The Economic Journal, vol. 90, pp. 95-106.

Driver, C., 2000, “Capacity utilisation and excess capacity: Theory, evidence and policy”, Review of Industrial Organisation, Nº 16, pp.69-87.

Duetsch, L., June 1984, “Entry and the extend of multi-plant operations”, The Journal of Industrial Economics, Vol. XXXII, Nº4, pp.477-487.

Ghemawat, P., December 1984, “Capacity expansion in the titanium dioxide industry”, The Journal of Industrial Economics, Vol. XXXIII, pp.145-163.

Gilbert, R. and M. Lieberman, spring 1987, “Investment and co-ordination in oligopolistic industries”, Rand Journal of Economics, Vol. 18 Nº 1, pp. 17-31.

Haskel, J.and C. Martin, March 1994,“Capacity and competition: Empirical evidence on U.K. panel data”, The Journal of Industrial Economics, Vol. XLII, Nº1, pp. 23-44.

Lieberman, M., June 1987, “Excess capacity as a barrier to entry”, The Journal of Industrial Economics, Vol. XXXV, Nº4, pp.607-625.

Lieberman, M., winter 1987,“Post-entry investment and market structure in the chemical processing industries”, Rand Journal of Economics, Vol.18 Nº 4, pp. 533-549.

Koscianski J. and S. Mathis, March 1995, “Excess capacity and the probability of entry”, Resource Policy, Vol. 21, Nº1, pp.43-51.

Koscianski J. and S. Mathis, 1996, “Excess capacity as a barrier to entry in the US titanium industry”, International Journal of Industrial Organisation, Nº 15, pp.263-281.

Masson, R. and J. Shaanan, August 1986,” Excess capacity and limit pricing an empirical test”, Economica, Nº 53, pp. 365-378.

Singh, S., M. Utton and M. Waterson, 1998, “Strategic behaviour on incumbent firms in the U.K.”, International Journal of Industrial Organisation, Nº16, pp.229-251.

Smiley, R., 1988, “Empirical evidence on strategic entry deterrence”, International Journal of Industrial Organisation, Nº 6, pp.167-180.

The Department of Trade an Industry, 1948-2000 “Digest of the United Kingdom Energy Statistics”.