A Process Analysis Model of the U.S. Steel Industry

In this paper a process analysis model of production in the U.S. Steel Industry is developed and tested. A technology matrix, which represents recent industry input-output structure, is estimated using engineering and metallurgical information. This matrix together with detailed cost, sales and resource capacity data is then used in a linear programming model of short-run resource allocation for the industry as a whole. Linear programming solutions are obtained and compared with available industry statistics for each year in the period 1955–1968. Theil's U statistic is computed to indicate how well the model performs. We conclude that it performs “fairly well” and that it should prove useful in various economic applications.