to include only the balanced panel of economies with capacity in both years, ensuring we compare like with like between years. In this restricted sample, the price of cement has fallen on average by 19.5 percent between 2011 and 2017 overall. This decline is smaller than in Table 1, indicating the overall average price decline was to a significant extent driven by countries moving from being importers to having at least one domestic producer.

First, consider markups. Globally, the average markup in the cement industry in 2011 is a 36.1 percent premium over marginal cost, while the average markup in 2017 has fallen to 26.0 percent. Non-zero markups are in line with expectations, given increasing returns to scale. Comparing markups across continents, we see that in 2011, markups in Africa were the highest of any continent, equal to 49.6 percent on average. The next highest markups were in Europe, at 41.2 percent on average, and the lowest were in Asia, at 22.1 percent on average. All continents experienced a decline in markups between 2011 and 2017, except for North America, which experienced a slight increase.

Second, consider marginal costs. In 2011, the average marginal cost in Africa was the highest of any continent, though it was similar to average cost in South America. Africa stands out as experiencing the largest decline in marginal cost between 2011 and 2017. Asia, North America, and South America experienced increasing marginal costs.

Together, these results suggest that both greater than average market power and higher operating costs played a role in determining the high average price of cement in Africa in 2011. However, the continent is no longer a clear outlier in 2017.

**Is Africa Different?** Regressions can shed further light on the differences between Africa and other continents, and the extent to which differences in demand, marginal costs, entry costs, or conduct explain the motivating facts in Section 2. Table 7 reports regressions of (the log of) the US dollar cement price on a fixed effect for the African continent.<sup>22</sup>

In Column 1, the estimated Africa coefficient is statistically significant, equal to 0.373 (s.e. = 0.065). Column 2 includes cement exports to the world of the nearest neighbor, the price of diesel, and road density, leading the Africa coefficient to fall to 0.160 (s.e. = 0.066), indicating that about three fifths of the difference in the cement price is explained by higher transportation costs and the absence of large cement exporters in Africa. Column 3 includes the import tariff on cement (which is only available for a subset of economies). Including this variable changes the Africa coefficient only slightly relative to Column 1, and the positive effect of tariffs on prices is not statistically significant, indicating tariffs cannot explain the

> 22Table D2 shows a similar analysis for the variable log PPP GDP per capita, in place of the Africa fixed effect. As shown in Figure 1, the two are highly correlated when measured at the country level. This specification provides a direct test of the Balassa-Samuelson-Bhagwati hypothesis that price levels and national income should be positively correlated.

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