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Antidumping protection and productivity of domestic firms: a firm-level analysis

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  • KONINGS, Jozef
  • VANDENBUSSCHE, Hylke

Abstract

We analyze the relationship between Antidumping (AD) Protection and the productivity of EU domestic firms in import-competing industries. For this purpose we identify a panel of domestic firms between 1993 and 2003 that at some point during this period are affected by AD initiations. Using a difference-in-difference approach, we find that AD measures result in improvements ofmeasured productivity for domestic firms. Total Factor Productivity (TFP) of protected firms increases by 2% in the short-run and by 5% to 13% in the long-run. However, there is substantial heterogeneity across firms. The effect of protection depends on the initial "distance-to-the-frontier firm" in the industry. While protection raises TFP of "laggard" domestic firms, it lowers TFP for "efficient" firms that operate close to the efficiency frontier. These results are consistent with recent theoretical work supporting the view that trade policy, under certain conditions, can induce technological catching-up. While this paper evaluates the effectiveness of AD policy it does not engage in a welfare analysis.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2007064.

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Date of creation: 01 Aug 2007
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Handle: RePEc:cor:louvco:2007064

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Keywords: total factor productivity; antidumping protection; technological catching-up;

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  1. Miyagiwa, Kaz & Ohno, Yuka, 1995. "Closing the Technology Gap under Protection," American Economic Review, American Economic Association, vol. 85(4), pages 755-70, September.
  2. Haijime Katayama & Shihua Lu & James Tybout, 2003. "Why Plant-Level Productivity Studies are Often Misleading, and an Alternative Approach to Interference," NBER Working Papers 9617, National Bureau of Economic Research, Inc.
  3. Jacques Mairesse & Jordi Jaumandreu, 2005. "Panel-data Estimates of the Production Function and the Revenue Function: What Difference Does It Make?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(4), pages 651-672, December.
  4. Prusa, Thomas J., 1992. "Why are so many antidumping petitions withdrawn?," Journal of International Economics, Elsevier, vol. 33(1-2), pages 1-20, August.
  5. Matsuyama, Kiminori, 1990. "Perfect Equilibria in a Trade Liberalization Game," American Economic Review, American Economic Association, vol. 80(3), pages 480-92, June.
  6. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 1-19.
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