Prices and Production Costs in Aluminium Smelting in the Short and the Long Run
Fecha
22/08/2006Estado
info:eu-repo/semantics/publishedVersionMetadatos
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No procede The main objective of this study is to reflect the institutional changes that
have characterized the aluminium industry as a result of the introduction
of London s Metal Exchange (LME) trading. In doing this, it is shown that
product prices are taken exogenously and linked to input prices via risk
sharing agreements. This forces producers, in a competitive environment,
to minimize costs. The latter is completed with a description of their
investment decision-making mechanism, in which investment is determined
by cost, and a measure of Tobin s q.
The main contributions of this study are: the use of a proprietary and
complete industry data set that allows one (a) to set up the short run input
and output price relationships; (b) to model the optimizing behaviour of
the sector via a flexible cost function (translog) allowing scale economies
and non-constant factor substitution; and (c) to describe the investmentprocess
that has emerged with the introduction of LME trading.
Prices and Production Costs in Aluminium Smelting in the Short and the Long Run
Tipo de Actividad
Artículos en revistasISSN
0003-6846Palabras Clave
No procedeLME futures, aluminium, translog, cost function, impulse response