IDEAS home Printed from https://ideas.repec.org/a/spr/weltar/v149y2013i3p443-476.html
   My bibliography  Save this article

Trade protection and market power: evidence from US antidumping and countervailing duties

Author

Listed:
  • Laura Rovegno

Abstract

Contingent protection measures were originally intended to protect domestic producers from what were considered to be “unfairly” cheap imports. However, due to the way in which these policies are designed and implemented, they have been heavily criticised for their greatly disruptive effects on markets, and particularly on competition. The analysis presented in this paper contributes to the debate by studying the impact of US antidumping (AD) and countervailing (CV) duties on domestic producers’ price-cost margins (PCM). To this end, the study takes advantage of a long panel of 4-digit industries in the United States covering 26 years of AD/CV activity, including the periods before and after the changes to AD/CV laws introduced following the Uruguay Round (UR). It finds evidence of a positive effect of AD/CV duties on PCM for the period prior to the UR, but the effect seems to disappear in the years following the UR. The analysis accounts for potential endogeneity in AD/CV duties, as well as the intensity of the protection granted. Copyright Kiel Institute 2013

Suggested Citation

  • Laura Rovegno, 2013. "Trade protection and market power: evidence from US antidumping and countervailing duties," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(3), pages 443-476, September.
    • Handle: RePEc:spr:weltar:v:149:y:2013:i:3:p:443-476
    DOI: 10.1007/s10290-013-0160-7
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10290-013-0160-7
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10290-013-0160-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Maurizio Zanardi, 2004. "Antidumping law as a collusive device," Canadian Journal of Economics, Canadian Economics Association, vol. 37(1), pages 95-122, February.
    2. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2003. "Falling Trade Costs, Heterogeneous Firms, and Industry Dynamics," Working Paper Series WP03-4, Peterson Institute for International Economics.
    3. Bown, Chad P. & Crowley, Meredith A., 2006. "Policy externalities: How US antidumping affects Japanese exports to the EU," European Journal of Political Economy, Elsevier, vol. 22(3), pages 696-714, September.
    4. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
    5. Nina Pavcnik, 2002. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(1), pages 245-276.
    6. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    7. Miyagiwa, Kaz & Ohno, Yuka, 1995. "Closing the Technology Gap under Protection," American Economic Review, American Economic Association, vol. 85(4), pages 755-770, September.
    8. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    9. Feinberg, Robert M. & Hirsch, Barry T., 1989. "Industry rent seeking and the filing of unfair trade complaints," International Journal of Industrial Organization, Elsevier, vol. 7(3), pages 325-340.
    10. Thomas J. Prusa & Susan Skeath, 2021. "The Economic and Strategic Motives for Antidumping Filings," World Scientific Book Chapters, in: Thomas J Prusa (ed.), Economic Effects of Antidumping, chapter 11, pages 233-257, World Scientific Publishing Co. Pte. Ltd..
    11. THARAKAN, P. K. Mathew & GREENAWAY, David & THARAKAN, Joe, 1998. "Cumulation and injury determination of the European Community in antidumping cases," LIDAM Reprints CORE 1348, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    12. Edward C. Kokkelenberg & Donna R. Sockell, 1985. "Union Membership in the United States, 1973–1981," ILR Review, Cornell University, ILR School, vol. 38(4), pages 497-543, July.
    13. Robert W. Staiger & Frank A. Wolak, 1994. "Measuring Industry-Specific Protection: Antidumping in the United States," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1994 Micr), pages 51-118.
    14. Bruce A. Blonigen & Benjamin H. Liebman & Wesley W. Wilson, 2007. "Trade Policy and Market Power: The Case of the US Steel Industry," NBER Working Papers 13671, National Bureau of Economic Research, Inc.
    15. J. M. Finger, 1981. "The Industry-Country Incidence of "Less than Fair Value" Cases in US Import Trade," NBER Chapters, in: Export Diversification and the New Protectionism: The Experiences of Latin America, pages 260-279, National Bureau of Economic Research, Inc.
    16. James Nieberding, 1999. "The Effect of U.S. Antidumping Law on Firms' Market Power: An Empirical Test," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(1), pages 65-84, February.
    17. Vandenbussche, Hylke & Zanardi, Maurizio, 2010. "The chilling trade effects of antidumping proliferation," European Economic Review, Elsevier, vol. 54(6), pages 760-777, August.
    18. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Survival of the best fit: Exposure to low-wage countries and the (uneven) growth of U.S. manufacturing plants," Journal of International Economics, Elsevier, vol. 68(1), pages 219-237, January.
    19. Thomas J. Prusa, 2021. "The Trade Effects of U.S. Antidumping Actions," World Scientific Book Chapters, in: Thomas J Prusa (ed.), Economic Effects of Antidumping, chapter 3, pages 21-43, World Scientific Publishing Co. Pte. Ltd..
    20. Barry T. Hirsch & David A. MacPherson, 2003. "Union Membership and Coverage Database from the Current Population Survey: Note," ILR Review, Cornell University, ILR School, vol. 56(2), pages 349-354, January.
    21. Thomas J. Prusa, 2021. "Why are so many antidumping petitions withdrawn?," World Scientific Book Chapters, in: Thomas J Prusa (ed.), Economic Effects of Antidumping, chapter 2, pages 1-20, World Scientific Publishing Co. Pte. Ltd..
    22. Justin R. Pierce & Peter K. Schott, 2009. "A Concordance Between Ten-Digit U.S. Harmonized System Codes and SIC/NAICS Product Classes and Industries," NBER Working Papers 15548, National Bureau of Economic Research, Inc.
    23. Stephen R. Bond, 2002. "Dynamic panel data models: a guide to micro data methods and practice," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 1(2), pages 141-162, August.
    24. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    25. Blonigen, Bruce A. & Bown, Chad P., 2003. "Antidumping and retaliation threats," Journal of International Economics, Elsevier, vol. 60(2), pages 249-273, August.
    26. Moore, Michael O, 1992. "Rules or Politics? An Empirical Analysis of ITC Anti-dumping Decisions," Economic Inquiry, Western Economic Association International, vol. 30(3), pages 449-466, July.
    27. Wendy L Hansen & Thomas J Prusa, 2021. "Cumulation and ITC decision-making: The sum of the parts is greater than the whole," World Scientific Book Chapters, in: Thomas J Prusa (ed.), Economic Effects of Antidumping, chapter 9, pages 171-194, World Scientific Publishing Co. Pte. Ltd..
    28. Bruce A. Blonigen & Jee-Hyeong Park, 2004. "Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence," American Economic Review, American Economic Association, vol. 94(1), pages 134-154, March.
    29. Robert C. Feenstra, 1996. "U.S. Imports, 1972-1994: Data and Concordances," NBER Working Papers 5515, National Bureau of Economic Research, Inc.
    30. Fabio Spadi, 2002. "Discriminatory Safeguards in the Light of the Admission of the People's Republic of China to the World Trade Organization," Journal of International Economic Law, Oxford University Press, vol. 5(2), pages 421-443, July.
    31. de Melo, Jaime & Cadot, Olivier & Tumurchudur, Bolormaa, 2007. "Anti-Dumping Sunset Reviews: The Uneven Reach of WTO Disciplines," CEPR Discussion Papers 6502, C.E.P.R. Discussion Papers.
    32. J.M. Finger & H. Keith Hall & Douglas R. Nelson, 2002. "The Political Economy of Administered Protection," Chapters, in: Institutions and Trade Policy, chapter 8, pages 81-95, Edward Elgar Publishing.
    33. Crowley, Meredith A., 2006. "Do safeguard tariffs and antidumping duties open or close technology gaps?," Journal of International Economics, Elsevier, vol. 68(2), pages 469-484, March.
    34. Konings, Jozef & Vandenbussche, Hylke, 2008. "Heterogeneous responses of firms to trade protection," Journal of International Economics, Elsevier, vol. 76(2), pages 371-383, December.
    35. Robert C. Feenstra, 1997. "U.S. Exports, 1972-1994: With State Exports and Other U.S. Data," NBER Working Papers 5990, National Bureau of Economic Research, Inc.
    36. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2011. "Multiproduct Firms and Trade Liberalization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(3), pages 1271-1318.
    37. Corinne M. Krupp & Patricia S. Pollard, 1996. "Market Responses to Antidumping Laws: Some Evidence from the U.S. Chemical Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 29(1), pages 199-227, February.
    38. Nelson, Douglas, 2006. "The political economy of antidumping: A survey," European Journal of Political Economy, Elsevier, vol. 22(3), pages 554-590, September.
    39. Jozef Konings & Hylke Vandenbussche & Linda Springael, 2001. "Import Diversion under European Antidumping Policy," Journal of Industry, Competition and Trade, Springer, vol. 1(3), pages 283-299, September.
    40. Konings, Jozef & Vandenbussche, Hylke, 2005. "Antidumping protection and markups of domestic firms," Journal of International Economics, Elsevier, vol. 65(1), pages 151-165, January.
    41. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Trade costs, firms and productivity," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 917-937, July.
    42. Michael M. Knetter & Thomas J. Prusa, 2021. "Macroeconomic factors and antidumping filings: evidence from four countries," World Scientific Book Chapters, in: Thomas J Prusa (ed.), Economic Effects of Antidumping, chapter 8, pages 153-169, World Scientific Publishing Co. Pte. Ltd..
    43. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    44. P. Tharakan & David Greenaway & Joe Tharakan, 1998. "Cumulation and injury determination of the European community in antidumping cases," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(2), pages 320-339, June.
    45. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
    46. Miyagiwa, Kaz & Ohno, Yuka, 1999. "Credibility of Protection and Incentives to Innovate," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 143-163, February.
    47. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    48. Hansen, Wendy L & Prusa, Thomas J, 1997. "The Economics and Politics of Trade Policy: An Empirical Analysis of ITC Decision Making," Review of International Economics, Wiley Blackwell, vol. 5(2), pages 230-245, May.
    49. Pierce, Justin R., 2011. "Plant-level responses to antidumping duties: Evidence from U.S. manufacturers," Journal of International Economics, Elsevier, vol. 85(2), pages 222-233.
    50. Pierce, Justin R., 2011. "Plant-level responses to antidumping duties: Evidence from U.S. manufacturers," Journal of International Economics, Elsevier, vol. 85(2), pages 222-233.
    51. Hansen, Wendy L., 1990. "The International Trade Commission and the Politics of Protectionism," American Political Science Review, Cambridge University Press, vol. 84(1), pages 21-46, March.
    52. Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-330, April.
    53. Bruce A. Blonigen & Stephen E. Haynes, 2002. "Antidumping Investigations and the Pass-Through of Antidumping Duties and Exchange Rates," American Economic Review, American Economic Association, vol. 92(4), pages 1044-1061, September.
    54. Gallaway, Michael P. & Blonigen, Bruce A. & Flynn, Joseph E., 1999. "Welfare costs of the U.S. antidumping and countervailing duty laws," Journal of International Economics, Elsevier, vol. 49(2), pages 211-244, December.
    55. Robert Baldwin & Jeffrey Steagall, 1994. "An analysis of ITC decisions in antidumping, countervailing duty and safeguard cases," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(2), pages 290-308, June.
    56. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    57. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    58. Robert M. Feinberg, 2005. "U.S. Antidumping Enforcement and Macroeconomic Indicators Revisited: Do Petitioners Learn?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(4), pages 612-622, December.
    59. Robert M. Feinberg & Kara M. Reynolds, 2006. "The Spread of Antidumping Regimes and the Role of Retaliation in Filings," Southern Economic Journal, John Wiley & Sons, vol. 72(4), pages 877-890, April.
    60. René Belderbos, 1997. "Antidumping and tariff Jumping: Japanese firms’ DFI in the European union and the United States," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(3), pages 419-457, September.
    61. Robert C. Feenstra & John Romalis & Peter K. Schott, 2002. "U.S. Imports, Exports, and Tariff Data, 1989-2001," NBER Working Papers 9387, National Bureau of Economic Research, Inc.
    62. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Metiu, Norbert, 2021. "Anticipation effects of protectionist U.S. trade policies," Journal of International Economics, Elsevier, vol. 133(C).
    2. Michel DE VROEY, 2013. "What can civil society expect from academic macroeconomics?," LIDAM Discussion Papers IRES 2013022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Alan Asprilla & Nicolas Berman & Olivier Cadot & Mélise Jaud, 2019. "Trade Policy And Market Power: Firm‐Level Evidence," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(4), pages 1647-1673, November.
    4. Chen, Zhisong & Su, Shong-Iee Ivan, 2022. "Countervailing effect and mitigation policy: A game-theoretical study in dual international competing photovoltaic supply chains," Renewable Energy, Elsevier, vol. 183(C), pages 160-171.
    5. Sérgio Kannebley Júnior & Glauco Avelino Sampaio Oliveira, 2019. "Documento de Trabalho 02/2019 - Probabilidade de investigação e aplicação de medidas antidumping para a indústria brasileira: Efeitos para a concorrência," Documentos de Trabalho 2019020, Conselho Administrativo de Defesa Econômica (Cade), Departamento de Estudos Econômicos.
    6. Michael Moore, 2015. "Sanctuary markets and antidumping: an empirical analysis of U.S. exporters," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(2), pages 309-328, May.
    7. Laura ROVEGNO, 2013. "Endogenous trade restrictions and exporters’ pricing," LIDAM Discussion Papers IRES 2013023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. repec:lic:licosd:34213 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kokko, Ari & Gustavsson Tingvall, Patrik & Videnord, Josefin, 2017. "Which Antidumping Cases Reach the WTO?," Ratio Working Papers 286, The Ratio Institute.
    2. Michel DE VROEY, 2013. "What can civil society expect from academic macroeconomics?," LIDAM Discussion Papers IRES 2013022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Bruce A. Blonigen & Jee-Hyeong Park, 2004. "Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence," American Economic Review, American Economic Association, vol. 94(1), pages 134-154, March.
    4. Laura ROVEGNO, 2013. "Endogenous trade restrictions and exporters’ pricing," LIDAM Discussion Papers IRES 2013023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    5. Nelson, Douglas, 2006. "The political economy of antidumping: A survey," European Journal of Political Economy, Elsevier, vol. 22(3), pages 554-590, September.
    6. repec:lic:licosd:34213 is not listed on IDEAS
    7. Meredith A. Crowley, 2007. "Cyclical dumping and U.S. antidumping protection: 1980-2001," Working Paper Series WP-07-21, Federal Reserve Bank of Chicago.
    8. Bruce A. Blonigen & Thomas J. Prusa, 2001. "Antidumping," NBER Working Papers 8398, National Bureau of Economic Research, Inc.
    9. Jabbour, Liza & Tao, Zhigang & Vanino, Enrico & Zhang, Yan, 2019. "The good, the bad and the ugly: Chinese imports, European Union anti-dumping measures and firm performance," Journal of International Economics, Elsevier, vol. 117(C), pages 1-20.
    10. Chad Brown & Paola Conconi & Aksel Erbahar & Lorenzo Trimarchi, 2020. "Trade Protection Along Supply Chains," Working Papers ECARES 2020-52, ULB -- Universite Libre de Bruxelles.
    11. Lu, Yi & Tao, Zhigang & Zhang, Yan, 2013. "How do exporters respond to antidumping investigations?," Journal of International Economics, Elsevier, vol. 91(2), pages 290-300.
    12. Pierce, Justin R., 2011. "Plant-level responses to antidumping duties: Evidence from U.S. manufacturers," Journal of International Economics, Elsevier, vol. 85(2), pages 222-233.
    13. Chandra, Piyush, 2016. "Impact of temporary trade barriers: Evidence from China," China Economic Review, Elsevier, vol. 38(C), pages 24-48.
    14. Kara M. Reynolds, 2009. "From Agreement to Application: An Analysis of Determinations under the WTO Antidumping Agreement," Review of International Economics, Wiley Blackwell, vol. 17(5), pages 969-985, November.
    15. Tobias D. Ketterer, 2016. "EU Anti-dumping and Tariff Cuts: Trade Policy Substitution?," The World Economy, Wiley Blackwell, vol. 39(5), pages 576-596, May.
    16. Veysel Avsar, 2013. "Antidumping, Retaliation Threats, and Export Prices," The World Bank Economic Review, World Bank, vol. 27(1), pages 133-148.
    17. Blonigen, Bruce A., 2006. "Working the system: Firm learning and the antidumping process," European Journal of Political Economy, Elsevier, vol. 22(3), pages 715-731, September.
    18. Park, Soonchan, 2009. "The trade depressing and trade diversion effects of antidumping actions: The case of China," China Economic Review, Elsevier, vol. 20(3), pages 542-548, September.
    19. Meredith A. Crowley, 2001. "Antidumping policy under imperfect competition," Working Paper Series WP-01-21, Federal Reserve Bank of Chicago.
    20. Bruce Blonigen & Thomas Prusa, 2003. "The Cost of Antidumping: the Devil is in the Details," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(4), pages 233-245.
    21. Pierce, Justin R., 2011. "Plant-level responses to antidumping duties: Evidence from U.S. manufacturers," Journal of International Economics, Elsevier, vol. 85(2), pages 222-233.

    More about this item

    Keywords

    Contingent protection; Antidumping; Countervailing duties; Import tariff; Markup; Price-cost margin; Market power; Uruguay Round; C33; D22; D43; F12; F13;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:weltar:v:149:y:2013:i:3:p:443-476. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.