This paper empirically analyzes the existence of market power in the global iron ore market during the period from 1993 to 2012. Using an innovative Stochastic Frontier Analysis (SFA) approach, we investigate the relationship between individual firm characteristics, macroeconomic conditions and the individual ability of firms to generate markups in the global iron ore market. Our findings indicate that the markups on average amount to 20%. Moreover, location of the main production site and experience measured in years of production are identified to be the most important determinants of the magnitude of firm-specific markups.

Autoren

Germeshausen, Robert
Panke, Timo
Wetzel, Heike

Schlagworte

Estimation of market power; Lerner indices; Stochastic Frontier Analysis; Non-renewable resources