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  5. The High and Falling Price of Cement in Africa

American Economic Journal:
Applied Economics

ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)

The High and Falling Price of Cement in Africa

  • Fabrizio Leone
  • Rocco Macchiavello
  • Tristan Reed
American Economic Journal: Applied Economics (Forthcoming)

Abstract

Prices for several intermediate inputs, including cement, are higher in developing economies—particularly in Africa. Combining recent data from the International Comparison Program with a global directory of cement firms we estimate an industry equilibrium model to distinguish between drivers of international price dispersion: demand, costs, conduct, and entry. Developing economies feature both higher marginal costs and higher markups. African markets are not characterized by less competitive conduct and, if anything, feature lower barriers to entry. Yet the small size of many national markets limits entry and competition and explains most of the higher markups and prices. Policy implications are discussed.

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