Glass Industry in Turkey

Topics: Economics, Marginal cost, Microeconomics Pages: 2 (688 words) Published: February 13, 2011

When glass industry in Turkey is analyzed, it is observed that there are middle and small sized firms, work places at workshop levels in very limited numbers and a dominant producer, Türkiye Şişe ve Cam Fabrikaları Topluluğu. More than 90% of the annual production of market is met by ŞİŞECAM. Although there are no law and arbitration barriers to enter to the glass market, firms hesitate to enter since glass industry requires continuous production with high capacity and continuous investment and raw materials in Turkey are not in high quality and the amount of their reserves in Turkey are declining day by day, namely the industry is becoming more costly and risky. Furthermore, diminishing returns in the short-run increase marginal cost of glass production as the necessity of innovation and continuous production makes producer buy more technological and faster machines and equipment but the staff cannot use them efficiently for a definite period, which increase total cost and marginal cost but not brings about same increase in output levels. Decline in quality of raw materials also explains the diminishing returns and rising marginal costs.

The buyer range of glass market is extensive as glass is not only used for decoration purposes and used as kitchen utensils but also it is used as an input in construction, food, furniture, white goods, medicine, soft drinks, automotive and electrical-electronics industries. In addition, glass plays an important role in these industries as the producers of these industries cannot substitute any other input for glass in some parts of their production processes. The representative of glass market in Turkey, Şişecam can determine the price or quantity of its products. As Şişecam is a price maker, not a price taker it is more likely that it will try set a price resulting in profit maximization which is not too high or too low and makes marginal revenue equals to marginal cost. It worths mentioning...
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