Paper #2 Steel

Due Friday 19 February 2016

This is a short paper to foster class discussion. Target length 3 pages, and no more than 5 pages.


Steel differs from beer in many ways. One is that in the US market brewers own neither downstream operations (distribution) nor upstream operations (growing hops and barley). That is, they are vertically integrated. and have not since Prohibition. Steel is different, though as traced in the Warrian book both the range of upstream and downstream operations undertaken has varied across time.

Note that “beer” may in fact be 3 separate industries that use similar production methods but do not directly compete with one another: macrobrewers, microbrewers and brew pubs. In contrast, steel includes two very different ways of making steel that (potentially) feed into the same market. That’s not central to this paper, but you should be thinking about this and other contrasts and similarities.


Why has been / is the steel industry vertically integrated? This is too broad for a short paper. One way to keep the paper short is to focus on one potential area of integration. An example on the upstread side would be owning iron mines. On the downstream side it might be running steel service centers or wire bar manufacturing operations. Another possible topic is to focus on a transition from more to less vertical integration.


The Warrian book should be your primary source on the industry. You should also look to the Martin textbook for discussions of vertical integration.


This should be treated as a “real” paper in terms of writing carefully. You need one paragraph in introduction, one paragraph in conclusion, and (target) three-five paragraphs to make your case. As with any paper, make sure you have a clear thesis, a question that you can answer. That’s your introduction. Your analysis follows. Your conclusion looks at questions your paper raised that you did not answer (perhaps for lack of data), puzzles that remain (which you might not know how to approach), or parallels with other industries. You final paragraph should not be a summary.