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In 2018, Chinese authorities announced continued efforts to reduce capacity in the cement industry, often forcing producers to close plants. As cement is costly to

In 2018, Chinese authorities announced continued efforts to reduce capacity in the cement industry, often forcing producers to close plants. As cement is costly to transport and has significant economies of scale in production, each urban area is a distinct oligopolistic market. If the Cournot model applies, what effect will a reduction in the number of producers have on cement prices? Before the reduction, large cities would typically have 10 or more cement producers whereas most small cities would only have two or three. Assuming that all cities lost at least one producer and that most cities lost about one-third of their producers, would the likely price effect be more significant in smaller or larger cities? A reduction in the number of producers will raise cement prices. The effect of a reduction in the number of producers will be more significant in smaller cities

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