... imports have very low prices. This effectively eliminates the possibility that the large U.S firms will be able to collude to keep prices up; such collusion would simply yield more share to the imports. Finally, the large integrated firms have substantial excess capacity - largely because they built plants when demand was greater and imports were a small threat. The investment costs from these large mills are sunk, so these firms are willing to push prices all the way down to variable costs in order to generate positive cash flow. Added to this internal rivalry is the threat posed by substitute industries - aluminum, plastics, and advanced composites. The growth of these substitutes contributes to the flat demand for steel, and further restricts the ability of steel firms to maintain positive price - cost margins. Together, these factors imply that steel is a fully competitive industry. In such industries, the only way ...

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