Market power and price discrimination

Whereas the scale of activity in the plastics reclamation and reprocessing industry is small (see figures in Table 3.6 above for USA), the firms involved in the virgin resin industry are large and are usually off-shoots of petrochemical concerns. Table 3.8 below gives capacities for Europe in 1994, and corresponding capacities for the same firms in 1997 where available. The comparison is very limited as many of the firms listed for 1994 do not appear for 1997 and vice versa.

From Table 3.7, it can be seen that for 1994, and each of the plastic types there are 5 or 6 firms, which dominate production. The same is true for 1997. The structure of the industry appears to be that of a small group of large producers with two fringes. One fringe group consists of smaller virgin resin producers, and another group of even smaller reprocessors. If virgin resin producers are "price-makers", they may be in a position to disadvantage other possible entrants, including plastics recyclers. For instance, if there is a significant competitive threat from recyclers, virgin plastics producers can "dump" their products for a period of time, until the threat has been removed.

Market power can also manifest itself in other ways. For instance, Ehrig and Curry (1992) suggest that at times post-industrial recycling may be lower than it might have been for competition reasons within the plastics industry. They suggest that as the plastics industry grew, unwanted post industrial scrap was sold by virgin producers on to independent reprocessors usually selling into different markets. Once these reprocessors began to compete with the virgin industry, the scrap was land filled or incinerated in order to reduce competition.

Table 3.7. Capacities of main European resin producers

HDPE

000 tons/yr.

PVC

000 tons/yr.

PS

000 tons/yr.

PET

000 tons/yr.

Firm

Cap.

Cap.

Firm

Cap.

Cap.

Firm

Cap.

Cap.

Firm

Cap

94

97

94

97

94

97

94

Borealis

600

510

Aiscondel

145

BASF

545

1 138

Inca

100

BP

370

-

BASF

250

BP

115

ICI

100

Dow C.

130

Buna

150

Buna

30

Eastman

125

DSM

230

520

Cires

100

Dow C.

445

1 620

Akzo

90

Elf A.

190

-

EKO

100

Elf A.

450

530

Hoechst

85

Enichem

250

Elf A.

710

735

Enichem

200

225

Shell

90

Hoechst

475

EVC

970

980

Huls

220

230

Radici

20

Huls

120

Hispavic

130

Huntsman

80

842

Zipperling

5

Petrochim

430

Huls

380

Lin Pac

25

Brilen

10

PCD

200

Ind. Gen.

100

Montefina

105

La Seda

20

Repsol

215

LVM

390

Neste

12

Elana

5

Row

215

Norsk H.

380

Shell

80

Sasa

20

Solvay

330

1 160

Rovin

200

Venpetil

10

Vestolen

160

Shell

205

Others

115

Solvay Vinnolit

850 610

1 420 720

Total W. Europe

4 030

5 670

2 307

680

Source: European Commission 1997; Modern Plastics, Jan. 98.

Source: European Commission 1997; Modern Plastics, Jan. 98.

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