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Does Antidumping Protection raise Market Power of Domestic Firms? Evidence from Firm Level Data

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  • Jozef Konings
  • Hylke Vandenbussche

Abstract

This paper estimates how anti-dumping (AD) protection affects the market power 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 to estimate markups of price over marginal cost. Our findings indicate that markups in most cases increase significantly in the period when firms enjoy AD protection compared to a period before protection. In industries where competition is very tough before protection, we fail to find an increase in markups, while in industries with some market power before protection, trade policy raises markups 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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File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp122.pdf
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Bibliographic Info

Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 12202.

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Length: 38 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:lic:licosd:12202

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

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  1. Pinelopi K. Goldberg & Michael M. Knetter, 1995. "Measuring the Intensity of Competition in Export Markets," NBER Working Papers 5226, National Bureau of Economic Research, Inc.
  2. Fischer, Ronald D., 1992. "Endogenous probability of protection and firm behavior," Journal of International Economics, Elsevier, vol. 32(1-2), pages 149-163, February.
  3. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
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