lThe Competitive Market: Examples
nAirlines in 1980s and 1990s.
nElectric Utilities in 1990s
nSteel in the 1970s and 1980s.
nAutos 1973-1985
nSoft Drinks 1977-1985
nTelephone Services 1980s and early 1990s
nPharmaceuticals 1980s onwards
Traditional Competitive Environments
For almost ¾ of a century it was a tight oligopoly. Until 1960s a handful of vertically integrated giants dominated the industry.
US Steel formed in 1901 –under president Judge Gray had the “Gary dinners”
Integrated Sector
Produce most of their steel from scratch in sprawling mills that are 2-7 miles long. Process was developed in the 19th century and hasn’t changed much since.
Coke and iron -> Blast furnace ->liquid pig iron ->steelmaking furnace->liquid steel->pots-> solid ingots or to a continuous casting machine->solid slab steel-> reheated & rolled
Minimills forced restructuring
1980s Japanese producers made major inroads Today 1 in 6 US steel workers is being financed by a Japanese mill.
Minimills 1960s made dramatic inroads Convert scrap into finished steel products.
Cost of a steel mill -$4 -$8 billion Minimill $250 million Nucor’s costs are estimated to be 14% below the lowest foreign producer and 18% below
US integrated producers. Between 1979-1989 markets are of major integrated producers fell from 73% to 42%
Minimills went from 8% to 20%
Today the steel industry is the scene of intense price competition
Pharmaceuticals :Change in generic drug laws -Patent term restoration act of 1984