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Are all trade protection policies created equal? Empirical evidence for nonequivalent market power effects of tariffs and quotas

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Author Info

  • Blonigen, Bruce A.
  • Liebman, Benjamin H.
  • Pierce, Justin R.
  • Wilson, Wesley W.

Abstract

Over the past 50years, the steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based. We exploit this extensive heterogeneity in trade protection to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Using plant-level Census Bureau data for steel plants from 1967 to 2002, we find evidence for significant market power effects for binding quota-based protection, but not tariff-based protection, particularly with respect to integrated and minimill steel producers. Our results are robust to calculation with two standard measures of market power and controlling for potential endogeneity of trade policies.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 89 (2013)
Issue (Month): 2 ()
Pages: 369-378

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Handle: RePEc:eee:inecon:v:89:y:2013:i:2:p:369-378

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Web page: http://www.elsevier.com/locate/inca/505552

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Keywords: Market structure; Nonequivalence of tariffs and quotas; VRAs; Antidumping; Mini-mills;

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References

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Cited by:
  1. Chad Bown, 2013. "How Different Are Safeguards from Antidumping? Evidence from US Trade Policies Toward Steel," Review of Industrial Organization, Springer, vol. 42(4), pages 449-481, June.
  2. Allan Collard-Wexler & Jan De Loecker, 2013. "Reallocation and Technology: Evidence from the U.S. Steel Industry," NBER Working Papers 18739, National Bureau of Economic Research, Inc.

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