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The Anatomy of Trade Deflection

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  • Avsar Veysel

    () (Texas A&M University Corpus Christi, Corpus Christi, TX 78412, USA)

Abstract

This study employs four-dimensional (firm-product-destination-year) export data of Brazilian firms to analyze firm-level responses when faced with an antidumping protection in a particular export market. We examine the extent to which firms shift their exports to other destinations in response to the antidumping duties. Our findings suggest that trade deflection depends on past export status in export markets. Firms deflect trade but only to destinations where they already have an established trading relationship. This prior relationship is important both for the intensive as well as for the extensive margin of trade alternative destinations. In addition to making sense of existing puzzles in trade deflection, this paper makes an important contribution by demonstrating how much the fixed costs of developing an export destination matter in terms of trade deflection.

Suggested Citation

  • Avsar Veysel, 2017. "The Anatomy of Trade Deflection," Global Economy Journal, De Gruyter, vol. 17(4), pages 1-11, December.
  • Handle: RePEc:bpj:glecon:v:17:y:2017:i:4:p:11:n:3
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    References listed on IDEAS

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    More about this item

    Keywords

    antidumping; trade deflection; WTO; intensive margin; extensive margin; firm-level export data;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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