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Does Antidumping Protection Raise Market Power? Evidence from Firm Level Data

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  • Konings, Jozef
  • Vandenbussche, Hylke

Abstract

This paper empirically tests the effects of Anti-Dumping (AD) protection on the price-cost margin of firms. To this end, we use a rich panel data set of 1,666 EU producers that were involved in AD cases initiated in 1996. Our findings indicate that price-cost margins in most cases significantly increase in the period of protection compared to a period before protection. In industries where competition is very tough before protection, we fail to find an increase in price-cost margins, while in industries with positive mark-ups before protection, trade policy raises market power between 3% points and 15% points, depending on the sector. Our results are robust to alternative specifications and estimation techniques. Our findings are also consistent with recent theoretical models that deal with the economic effects of firm behavior in response to AD protection.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3571.

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Date of creation: Oct 2002
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Handle: RePEc:cpr:ceprdp:3571

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Keywords: antidumping cases; European producers; market power; price-cost markups;

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Cited by:
  1. Jozef Konings & Patrick Van Cayseele & Frederic Warzynski, 2002. "The Effects of Privatization and Competitive Pressure on Firms?Price-cost Margins: Micro Evidence from Emerging Economies," LICOS Discussion Papers 12502, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  2. Jacques-Bernard Sauner-Leroy, 2003. "The impact of the implementation of the Single Market Programme on productive efficiency and on mark-ups in the European Union manufacturing industry," European Economy - Economic Papers 192, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.

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