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Competition in the U.S. Energy Industry
Appendix D Price-Output Behavior in the
Coal Industry Reed Moyer*
This
chapter evaluates the conduct of the coal industry in recent years
with respect especially to its pricing behavior, both in domestic
and export markets, its output policies and behavior, and the
relation between price and output decisions. It specifically
analyzes the effect, if any, on output decisions of coal companies
that have been acquired by petroleum and other large noncoal
companies. We look at the factors allegedly affecting the recent
sharp increases in coal prices to determine whether collusive
forces were at work or whether the price increases can be
attributed to other market and nonmarket factors. Some specific
charges of price conspiracy will be analyzed to determine their
validity.
OUTPUT
BEHAVIOR OF NONCOAL CO.-CONTROLLED FIRMS
The
structure of the coal industry has been characterized in recent
years by increasing concentration of output and the acquisition of
many large coal producers by petroleum and mining companies. The
expansion of the petroleum companies, especially, into other energy
fields has created concern and has, in fact, led to an
investigation by the Federal Trade Commission of some of the
coal-oil mergers.
Interfuel
acquisitions pose several potential threats. One of these is the
danger of their creating sufficient market power to affect
competition adversely. In a market where petroleum products and
coal are competitive, the acquisition of coal companies might
reduce the number of sellers of energy in that market with a
concomitant potential increase of market power that may flow from
increased concentration. We say that the number of sellers
"might"