Abstract

RODRIGUEZ LIBOREIRO, Pablo. Competition, increasing returns and excess capacity: the global steel industry (2000-2014). Cuad. Econ. [online]. 2019, vol.38, n.76, pp.137-171. ISSN 0121-4772.  https://doi.org/10.15446/cuad.econ.v37n76.61257.

After fifteen years of expansion spurred by strong demand, the steel industry is facing an overcapacity problem that affects all major producing countries in the world. This is explained by the strong competition that has characterized the recent development of the sector and has forced competing companies to form large reserves of capacity to capture market against rivals and exploit increasing returns to scale to lower their costs production. Thus, the growing demand in terms of minimum scale has forced companies to undertake major expansions of its capacity to meet the requirements set by global competition. The contradiction between this pattern of expansion, as determined by criteria of efficiency, with respect to the pattern of steel demand, typically cyclical, explains the formation of a large excess capacity worldwide.

JEL: D22, D24, L11, L6.

Keywords : Competition; overcapacity; reserve of capacity; increasing returns; minimum efficient scale..

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