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Technology Adoption under Price Undertakings

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  • Greetje Everaert

Abstract

Economists most often analyse the effects of protectionist or antidumping policies in the context of tariffs or voluntary export restraints - the latter are very similar to quotas in fact. Antidumping policies in the European Union however make frequent use of price undertakings. Whereas the effects of tariff and quota protection on technology adoption have been demonstrated by Miyagiwa and Ohno (1995), no such analysis has been carried out for price undertakings. In contrast to previous analysis, this article shows that adoption of new technologies is always delayed under a regime of price undertakings, as compared to the case of free trade, and that this doesn't depend on whether protection is temporary or permanent. Thus, our results challenge some of the conclusions of Miyagiwa and Ohno (1995) and put further doubt on the infant-industry argument for protection. We further analyse the sensitivity of the timing of technology adoption to the instrument of protection and formulate policy recommendations on the basis of this analysis.

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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 13703.

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Length: 25 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:lic:licosd:13703

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Keywords: Trade protection; Antidumping; Technology adoption; Price Undertaking;

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References

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  1. Miyagiwa, K. & Ohno, Y., 1993. "Closing the Technology Gap Under Protection," Discussion Papers in Economics at the University of Washington 93-09, Department of Economics at the University of Washington.
  2. Kiminori Matsuyama, 1987. "Perfect Equilibria in a Trade Liberalization Game," Discussion Papers 738, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Tornell, Aaron, 1991. "Time Inconsistency of Protectionist Programs," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 963-74, August.
  4. Klaus Stegemann, 1991. "The International Regulation of Dumping: Protection Made Too Easy," Working Papers 834, Queen's University, Department of Economics.
  5. Brainard, S. Lael & Verdier, Thierry, 1997. "The political economy of declining industries: Senescent industry collapse revisited," Journal of International Economics, Elsevier, vol. 42(1-2), pages 221-237, February.
  6. Fudenberg, Drew & Tirole, Jean, 1985. "Preemption and Rent Equilization in the Adoption of New Technology," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 383-401, July.
  7. Klaus Stegemann, 1991. "The International Regulation of Dumping: Protection Made Too Easy," The World Economy, Wiley Blackwell, vol. 14(4), pages 375-405, December.
  8. Miravete, E.J., 1997. "Time-Consistent Protection With Learning by Doing," UFAE and IAE Working Papers 395.97, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  9. Patrick A. Messerlin, 1990. "Anti-Dumping Regulations or Pro-Cartel Law? The EC Chemical Cases," The World Economy, Wiley Blackwell, vol. 13(4), pages 465-492, December.
  10. Bruce A. Blonigen & Chad P. Bown, 2001. "Antidumping and Retaliation Threats," NBER Working Papers 8576, National Bureau of Economic Research, Inc.
  11. Vandenbussche, Hylke & Veugelers, Reinhilde & Konings, Jozef, 2001. "Unionization and European Antidumping Protection," Oxford Economic Papers, Oxford University Press, vol. 53(2), pages 297-317, April.
  12. Leahy, Dermot & Neary, J Peter, 1999. "Learning by Doing, Precommitment and Infant-Industry Promotion," Review of Economic Studies, Wiley Blackwell, vol. 66(2), pages 447-74, April.
  13. Hylke Vandenbussche, 1996. "Is European antidumping protection against Central Europe too high?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 132(1), pages 116-138, March.
  14. Braillard, S. Lael & Verdier, Thierry, 1994. "Lobbying and adjustment in declining industries," European Economic Review, Elsevier, vol. 38(3-4), pages 586-595, April.
  15. Niels, Gunnar, 2000. " What Is Antidumping Policy Really About?," Journal of Economic Surveys, Wiley Blackwell, vol. 14(4), pages 467-92, September.
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