Ming-Yuan Chen
"Survival duration of plants: evidence from U.S. petroleum industry"
JEL codes: C41, L11, L71
Keywords: duration analysis, post-deregulation survival, regulatory subsidy, technology use, multiplant coordination

Abstract: This paper presents a duration analysis on the survival of U.S. petroleum refining plants for the 1981-1986 period, when the industry as a whole declines in response to decontrols 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 dta. Both small plants receiving larger entitlement subsidies and simple plants equipped with fewer technologies have lower survival duration. An inverse U-shaped effect of multiplant coordination on life duration is found. Longer lifetimes of acquired plants suggest the effect of takeovers in facilitating plant restructuring and survival.