The minimum optimal steel plant and the survivor technique of cost estimation

The survivor technique is used to examine economies of scale in the U.S. steel industry, and the results are compared to an earlier engineering approach study by Tarr. Specifically, the paper focuses on the conventional fully-integrated steel mill with capacities of over 1 million tons (MT) per year. The results are consistent with Tarr's estimate of a conventional integrated steel mill Minimum Optimal Scale of 6 MT a year. The analysis and conclusions set forth are those of the author and do not necessarily reflect the views of other members of the Bureau of Economics, other Commission staff, or the Commission itself. The author would like to thank the following people: Morris Morkre, Joseph Mulholland, Pauline Ippolito, John Rolfe, and an anonymous referee for helpful comments and suggestions on the various drafts and Ty D. Weisendanger and Barry R. Sherman for help in the data collection.