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Do safeguard tariffs and antidumping duties open or close technology gaps?

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Author Info
Meredith A. Crowley

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Abstract

This paper examines how the country-breadth of tariff protection can affect the technology adoption decisions of both domestic import-competing and foreign exporting firms. The analysis is novel in that shows how firm-level technology adoption changes under tariffs of different country-breadth. I show that a country-specific tariff like an antidumping duty induces both domestic import-competing firms and foreign exporting firms to adopt a new technology earlier than they would under free trade. In contrast, a broadly-applied tariff like a safeguard can accelerate technology adoption by a domestic import-competing firm, but will slow-down technology adoption by foreign exporting firms. Because safeguard tariffs can delay the foreign firm's adoption of new technology, the worldwide welfare costs associated with using them may be larger than is generally believed.

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Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-02-13.

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Date of creation: 2002
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Handle: RePEc:fip:fedhwp:wp-02-13

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Keywords: Antidumping duties ; Tariff;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Reinganum, Jennifer F, 1981. "On the Diffusion of New Technology: A Game Theoretic Approach," Review of Economic Studies, Blackwell Publishing, vol. 48(3), pages 395-405, July. [Downloadable!] (restricted)
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  2. Jennifer F. Reinganum, 1981. "Market Structure and the Diffusion of New Technology," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 618-624, Autumn. [Downloadable!] (restricted)
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  3. Robert Staiger & Frank Wolak, 1994. "Measuring Industry Specific Protection: Antidumping in the United States," International Trade 9410004, EconWPA. [Downloadable!]
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  4. James C. Hartigan, 1996. "Predatory Dumping," Canadian Journal of Economics, Canadian Economics Association, vol. 29(1), pages 228-39, February. [Downloadable!] (restricted)
  5. Ronald D. Fischer & Thomas J. Prusa, 1999. "Contingent Protection as Better Insurance," NBER Working Papers 6933, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Thomas J. Prusa, 2001. "On the spread and impact of anti-dumping," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 591-611, August. [Downloadable!] (restricted)
  7. Wilfred J. Ethier, 1998. "Regionalism in a Multilateral World," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1214-1245, December. [Downloadable!] (restricted)
  8. 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 143-63, February.
  9. Finger, J M & Hall, H Keith & Nelson, Douglas R, 1982. "The Political Economy of Administered Protection," American Economic Review, American Economic Association, vol. 72(3), pages 452-66, June. [Downloadable!] (restricted)
  10. Clarida, Richard H, 1993. "Entry, Dumping, and Shakeout," American Economic Review, American Economic Association, vol. 83(1), pages 180-202, March. [Downloadable!] (restricted)
  11. Bagwell, Kyle & Staiger, Robert W, 1990. "A Theory of Managed Trade," American Economic Review, American Economic Association, vol. 80(4), pages 779-95, September. [Downloadable!] (restricted)
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  12. Kyle Bagwell & Robert W. Staiger, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March. [Downloadable!] (restricted)
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  13. Matsuyama, Kiminori, 1990. "Perfect Equilibria in a Trade Liberalization Game," American Economic Review, American Economic Association, vol. 80(3), pages 480-92, June. [Downloadable!] (restricted)
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  14. Anderson, James E, 1992. "Domino Dumping, I: Competitive Exporters," American Economic Review, American Economic Association, vol. 82(1), pages 65-83, March. [Downloadable!] (restricted)
  15. Miyagiwa, Kaz & Ohno, Yuka, 1995. "Closing the Technology Gap under Protection," American Economic Review, American Economic Association, vol. 85(4), pages 755-70, September. [Downloadable!] (restricted)
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  16. Fudenberg, Drew & Tirole, Jean, 1985. "Preemption and Rent Equilization in the Adoption of New Technology," Review of Economic Studies, Blackwell Publishing, vol. 52(3), pages 383-401, July. [Downloadable!] (restricted)
  17. Wilfred J. Ethier, 2001. "Unilateralism in a Multilateral World," Tinbergen Institute Discussion Papers 01-033/2, Tinbergen Institute. [Downloadable!]
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  18. Sharon Oster, 1982. "The Diffusion of Innovation among Steel Firms: The Basic Oxygen Furnace," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 45-56, Spring. [Downloadable!] (restricted)
  19. Gruenspecht, Howard K., 1988. "Dumping and dynamic competition," Journal of International Economics, Elsevier, vol. 25(3-4), pages 225-248, November. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Everaert, Greetje M.M., 2004. "The Political Economy of Restructuring and Subsidisation: An International Perspective," BOFIT Discussion Papers 12/2004, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
    Other versions:
  2. Meredith A. Crowley, 2001. "Antidumping policy under imperfect competition," Working Paper Series WP-01-21, Federal Reserve Bank of Chicago. [Downloadable!]
  3. Bruce Blonigen & Thomas Prusa, 2003. "The Cost of Antidumping: the Devil is in the Details," Journal of Policy Reform, Taylor and Francis Journals, vol. 6(4), pages 233-245, January. [Downloadable!] (restricted)
  4. Hylke Vandenbussche & Ziga Zarnic, 2006. "Did US Safeguard Protection on Steel Affect Market Power of European Steel Producers?," LICOS Discussion Papers 17606, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  5. Greetje Everaert, 2003. "Technology Adoption under Price Undertakings," LICOS Discussion Papers 13703, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
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