| The world copper industry has undergone significant structural change in the last two decades. World mine output controlled by the four largest U.S. companies, for example, has fallen from 35 percent in 1966 to just above 9 percent by 1985. The principal causes for the decline in market power are expropriations by Third World governments and increasingly stringent domestic environmental regulation.;The changes in the copper market and pricing arrangements are contrasted with those in the market for frozen concentrated orange juice. Although there have been significant increases in imports of bulk concentrate, the market position of the major processors has not eroded, the futures market has not become increasingly important, and a type of two-tier pricing system continues.;Finally, the dissertation attempts to quantify the changes in the degree of price integration in the copper market. Standard models are modified to account for the convergence of cash and futures prices. However, even when modified, the results are not impressive. The marked change in price integration observed in plots and simple correlation coefficients is not readily apparent in the coefficients of the more sophisticated models. The results suggest that these models should be used with a great deal of caution.;Prior to these changes, the copper market was a segmented, two-tier market. Two futures exchanges, the London Metals Exchange and the New York Commodity Exchange, provided quotes of market prices. Copper producers, on the other hand, sold their copper based on published list prices, which for long periods differed significantly from market prices. However, with the decline in firms' market power, the number of firms using and the significance of published price lists decreased, those that remained relied increasingly in futures markets for prices, and futures markets themselves became increasingly widely used. |
