using oxygen as an example, assume that both countr ies use the same amount of oxygen but that one country's industry purchased its ox...
using oxygen as an example, assume that both countr ies use the same amount of oxygen but that one country's industry purchased its oxygen I : -100- and the other produced its oxygen. Using this study's measurement method, the purchaser's steelmak ing costs would appear to be lower even if actual costs for the two countr ies were the same. Outlays for oxygen by the purchasers would not be counted while the producer's cost series for electricity and labor would reflect the cost of inputs to produce oxygen. This would give a misleading indication of relative costs at any point in time, but the trend of relative costs ov~~t.ime might still be accurate if oxygen costs remained a constant proportion of total costs. If oxygen processes became an increasingly important part of steelmaking, however, there would be a misleading indication of an increasing relative cost trend in the oxygen producing country even if both countr ies increased their expenditures for oxygen at the same rate.
Little imagination is needed to identify the likelihood of numerous possible distortions in this study's relative cost measures both at points in time and as indicators of trends over time. The authors believe they have used the best available data, however, and must rest the validity of their results on the assumption that most distortions are insignificant and that even significant distortions are offset by others to yield an insignificant net effect. They do believe that the trends in the relative costs computed are generally correct in direction and approximate the magnitude of the actual changes.
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