Chad Syverson's paper, "Market Structure and Productivity: A Concrete Example," explores the role of demand-side factors in explaining productivity differences among producers, particularly in the context of spatial substitutability. The paper argues that when producers are densely clustered in a market, consumers have more options, making the market more competitive and less profitable for inefficient producers. This leads to a truncation of the productivity distribution from below, resulting in higher minimum and average productivity levels, as well as less dispersion. The study uses data from U.S. ready-mixed concrete plants to test this hypothesis, focusing on the impact of high transport costs, which create spatial differentiation and increase substitutability. The results support the model's predictions, showing that markets with higher demand density have higher productivity levels and less dispersion among producers. The paper also discusses the implications for competition and scale economies, suggesting that the observed productivity differences are driven by selective survivorship rather than technological or external factors.Chad Syverson's paper, "Market Structure and Productivity: A Concrete Example," explores the role of demand-side factors in explaining productivity differences among producers, particularly in the context of spatial substitutability. The paper argues that when producers are densely clustered in a market, consumers have more options, making the market more competitive and less profitable for inefficient producers. This leads to a truncation of the productivity distribution from below, resulting in higher minimum and average productivity levels, as well as less dispersion. The study uses data from U.S. ready-mixed concrete plants to test this hypothesis, focusing on the impact of high transport costs, which create spatial differentiation and increase substitutability. The results support the model's predictions, showing that markets with higher demand density have higher productivity levels and less dispersion among producers. The paper also discusses the implications for competition and scale economies, suggesting that the observed productivity differences are driven by selective survivorship rather than technological or external factors.