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.
