Supply Disruption and Vertical Integration: Evidence from Korea’s Concrete Industry during Railroad Strike

This paper uses an episode of disruption in cement supply caused by a railroad strike to analyze its impact on concrete production in the downstream. Empirical analysis shows that during the strike, non-integrated concrete makers did not lose but gained in production compared to vertically integrated concrete makers. The effect is found to be weak among non-integrated concrete producers which cannot switch suppliers easily due to geographic location. This paper also discusses how the result could be affected by the continuing supplier-customer relation and the persistence of disruption.