This dissertation is an international industrial organization study of pricing in the copper industry with emphasis on the rationale for and collapse of the "producer price system" in the late 1970's. The producer price system was a mechanism through which certain firms administered a "producer price" for refined copper, which frequently differed from the market price as determined at the commodity exchanges in New York and London.

The main difference between this and previous work on copper pricing is that this work explicitly recognizes the movement over time of the domestic copper industry into the international marketplace, and the related inability of domestic producers to satisfy their pricing objectives. The producer price system is viewed as an increasingly unsuccessful attempt to set non-market prices in order to maximize profits in the long run.

The framework consists of, first, an examination of structure and behavior in the copper industry so as to determine the market power of that sector which administered producer prices. Second, alternative rationales for the producer price system are evaluated and one is posited as the actual explanation. Third, competition between the two sectors and the collapse of the producer price system are analyzed.

The main conclusions are as follows: The producer price system enabled member firms to cover their costs of production and investment and to moderate prices relative to market levels. The ability of these firms to set non-market prices stemmed from the short-run behavior-based market power they acquired through quasi-vertical integration. The switch to market pricing was caused by increasing costs in the U.S. and increasing competition by foreign producers with different pricing objectives. The producer price system was highly unprofitable during its final years in operation. Its collapse was an efficient market outcome.