The Economics Of The Brick Cycle and Its Effects on Firm and Industry Structure

Home and Abstract Introduction Brick Demand UK House Construction

The Economics of Brick Production

Increasing Concentration of the Brick Industry II III IV V VI VII VIII IX

Conclusions Brick Industry Other Cyclical industries -Christmas trees

  Increasing Market Concentration within the UK Brick Industry V

Table 4.2 shows 22 yards which, if they were all individually owned, would be competing strongly on price to sell all their output capacity. Price in this situation would be very volatile. However, because one company owns all the plants, its overall marginal cost curve is upward sloping, and it can there fore easily adjust production in the short-term by closing and re-opening whole plants, and still, maximise profits (by equating MC with MR). LBC’s individual supply is therefore elastic even in the short-term and because of this, market price is far less volatile.

LBC is an example of a firm with a large number of yards. However, similar moderating effects can occur when smaller groupings of yards were made. All these yards then have increasing marginal cost curves within the group as a whole, and because of this, market supply is more elastic in the short-term, and therefore price is less volatile.

  • R. Hillier. Clay That Burns, LBC Co. Ltd. 1981, P.38 offers a very good account of this during the years 1890-1914.
  • R. Bower. Decreasing Marginal Cost in Brick Production. P.9.

Table 4.2. Gross makes (millions); costs per 1,000 bricks indexed from Kings Dyke as 100.

1973 1974

Works Total “Makes” (M) Costs/1,000 Total “Makes” (M) Costs/1,000

1973
1974
LBC Works
Total "Makes" (M)
Cost/1000
Total "Makes" (M)
cost/1000
Kings Duke
127
100.0
135
100.0
New Saxon
106
103.9
109
95.1
Beeby’s
164
124.1
129
127.8

Norman Cross*

55
126.4
43
126.8
Dogsthorpe*
37
127.2
29
123.0
Stewartly*
738
128.4
563
141.0
LB 1*
92
129.9
74
132.5
Calvert*
404
131.0
249
134.5
Jubilee@
63
136.6
47
135.1
Bletchley
208
137.8
179
138.0
Northam
35
138.0
28
133.2
Hicks*
91
142.1
69
134.4
Orton*
104
144.1
83
143.1
LB 2/4@
107
150.0
34
146.7
Coronation@
121
153.6
27
162
Star Whittlesey@
37
159.4
10
143.2
Victory@
35
161.0
11
153.6
Kempston*
167
165.5
115
171.3
Elstow
26
166.8
-
-

* Reduced to single shift working, and /or kilns put out, in the course of 1974.

@ Closed in the course of 1974.

Source; M & MC. 1974.

M & MC. 1983.

Thus, if the number of multi-plant firms in the brick industry increases, moderating effects on price fluctuation will be felt even if no one firm or group of firms to able to increase their relative market shares as a result. This was particularly true for the U.K. brick industry in 1890 – 1914.

 

©2005-06 ©1985, ©2007

R Mathews - any comments? info@brickbat.co.uk

These pages are brought to you with the help of Christmas tree farm Chesham for fresh Christmas trees every Christmas