Book Review: Steel and Public Policy

• Published date: 01 September 1972
• Date: 01 September 1972
• DOI: 10.1177/0003603X7201700311
• Author: Corwin D. Edwards
• Subject Matter: Book Reviews

BOOK REVIEWS 951

Charles K. Rowley, Steel and Public Policy, London: Mc-

Graw-Hill (1971), pp.

259,

£4.30.

This is a book about public policy toward the steel indus-

try

in the United States and the United Kingdom, derived

from study of most of the specialized economic writings about

the industry in both countries.

Its

analyses and recommenda-

tions are grounded in a modified version of a Pareto welfare

function.

Mter

initial chapters concerned with the nature of the

steel industry's costs, demand, prices, and capital formation,

a five-chapter section entitled "The Anatomy of Market Fail-

ure" discusses the industry in relation to market power, in-

flation, bottleneck and leverage effects in the economy,

ineffi-

cient operation, and the responsiveness of prices to environ-

mental influences. Though the information upon which the

analysis is based is derived from both countries, appraisals

usually differ for the United States and the United Kingdom.

The summary

that

follows will center upon what pertains to

the United States.

In

these five chapters, the American industry is acquitted

of most of the charges

that

have been made against

it

by its

critics. Concentration in steel markets "is insignificant" (p.

139). The industry operates in a "competitive framework"

sufficient to make returns from price conspiracy

"nat

very

high" and to mute internal pressures in favor of such con-

spiracy (pp. 139-40). Price leadership has not been evident in

recent years (pp.144-45).

Barriers

to

entry

are

only moderate

(p. 147). The argument

that

steel price increases have exer-

cised a significant inflationary influencein the post-war period

is "exaggerated

if

not indeed entirely unfounded" (p. 173),

and guide-post price regulation of steel is "demonstrably un-

justified" (p. 173). The industry does not exert "significant

leverage or bottleneck effects detrimental either to the growth

rate or to the stability of the national economy" (p. 187). Ex-

cept for the two largest companies, the industry does not ap-

pear to be inefficient in innovation and diffusion of techniques