1. _The average price of cement in Africa was the highest of any continent in 2011, and consumption was the lowest._ Panel A of Table 1 reports average prices in each continent and year in our sample, showing that the price in Africa is the highest in 2011, at $252 _/t_ . This pattern is also visible on the global map of prices in Figure A2. High cement prices on the continent have been highlighted by others (e.g., World Bank, 2016; Beirne and Kirchberger, 2021), in part because they stand in stark contrast to the implications of the classic theory of international price differences (Balassa, 1964; Samuelson, 1964; Bhagwati, 1984). According to this theory, lower wages in Africa should lead to a lower price of cement. Even though cement production is not labor intensive, lower productivity in the non-tradable sector could reduce the price of other locally procured inputs (Hsieh and Klenow, 2007). While high prices could lead to lower consumption by moving down the demand curve, lower consumption could also reflect exogenously lower demand conditional on prices, due for instance to lower GDP per capita or population in African countries.

2. _African economies have on average fewer cement firms and less production capacity than other continents._ Panel B of Table 1 indicates that the average economy in Africa had just 1.2 firms in 2011, adjusted for market concentration. Throughout, we refer to the (concentration-adjusted) number of firms, or _Nit_<sup>_⋆≡_1</sup><sup>_/Hit_,where</sup><sup>_Hit_is</sup> the Herfindahl index of capacity concentration.<sup>8</sup> Average installed capacity in each African economy is similarly low, at 3 megatons per annum in 2011.

3. _The average price of cement in Africa fell by more than any in other continent between 2011 and 2017, coinciding with entry and capacity installation._ Panel A of Table 1 shows the average price of cement in Africa had fallen by one-third to $167 _/t_ , substantially less than the price in North America. In just six years, cement in Africa was less expensive than in several other continents (comparing the 2011 and 2017 maps in Figure A2 illustrates the pattern). A potential explanation for the fall in prices is shown in Panel B of Table 1. Between these years there was a substantial increase in the average number of firms (by 58.5%) and average installed capacity (by 70.3%).

An important question is the extent to which the observed increase in the number of firms and capacity explains the decline of cement prices and, if so, through which channels.

> 8 _Nit ⋆_<sup>isthenumberoffirmssuchthat</sup><sup>_Hit_=</sup><sup>_N_</sup> _it_<sup>_⋆_(1</sup><sup>_/N_</sup> _it_<sup>_⋆_)2= 1</sup><sup>_/N_</sup> _it_<sup>_⋆_.Apracticaladvantageofthismeasure</sup> is that it reduces the correlation of our measure of market structure with market size, which may arise for instance in the few especially large markets in the data. For instance China had 27 firms in 2017, but it has a concentration-adjusted number of firms of 6.2. The United States, in comparison, had 17 firms and a concentration-adjusted number of firms equal to 12.7. Further, this transformation allows us to capture information on market share in a way that is theoretically consistent with the model in Section 3.

7