This paper presents a duration analysis on the survival of US petroleum refining plants for the 1981–1986 period, when the industry as a whole declines in response to the decontrol of crude oil markets. The purpose is to examine the duration dependence and determinants of post-deregulation plant lifetimes. The Weibull model with the correction for unobserved individual heterogeneity provides a better fit to the data. Empirical results show that plant size, age, regulatory subsidies, technology use, and multiplant coordination are key determinants of refinery life duration after deregulation. In addition, major integrated oil companies tend to make timely restructuring via refinery closures and sales. The interactive effects of size and technology use and of multiplant coordination and integrated organization are also important to the refinery survival.
Relation:
International journal of industrial organization 20(4), pp.517-555
