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Are all trade protection policies created equal? Empirical evidence for nonequivalent market power effects of tariffs and quotas

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  • Blonigen, Bruce A.
  • Liebman, Benjamin H.
  • Pierce, Justin R.
  • Wilson, Wesley W.

Abstract

Over the past 50years, the steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based. We exploit this extensive heterogeneity in trade protection to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Using plant-level Census Bureau data for steel plants from 1967 to 2002, we find evidence for significant market power effects for binding quota-based protection, but not tariff-based protection, particularly with respect to integrated and minimill steel producers. Our results are robust to calculation with two standard measures of market power and controlling for potential endogeneity of trade policies.

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  • Blonigen, Bruce A. & Liebman, Benjamin H. & Pierce, Justin R. & Wilson, Wesley W., 2013. "Are all trade protection policies created equal? Empirical evidence for nonequivalent market power effects of tariffs and quotas," Journal of International Economics, Elsevier, vol. 89(2), pages 369-378.
    • Handle: RePEc:eee:inecon:v:89:y:2013:i:2:p:369-378
    DOI: 10.1016/j.jinteco.2012.08.009
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    Cited by:

    1. Alan Asprilla & Nicolas Berman & Olivier Cadot & Mélise Jaud, 2019. "Trade Policy And Market Power: Firm‐Level Evidence," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(4), pages 1647-1673, November.
    2. James Lake & Maia Linask, 2015. "Costly distribution and the non-equivalence of tariffs and quotas," Public Choice, Springer, vol. 165(3), pages 211-238, December.
    3. repec:pri:cepsud:230deloecker is not listed on IDEAS
    4. Allan Collard-Wexler & Jan De Loecker, 2015. "Reallocation and Technology: Evidence from the US Steel Industry," American Economic Review, American Economic Association, vol. 105(1), pages 131-171, January.
    5. Jiemiao Dong & Yinxia Mi & Zhuangxiong Yu, 2022. "Industrial plans, export destinations and product quality," The World Economy, Wiley Blackwell, vol. 45(3), pages 812-840, March.
    6. Allan Collard-Wexler & Jan De Loecker, 2015. "Reallocation and Technology: Evidence from the US Steel Industry," American Economic Review, American Economic Association, vol. 105(1), pages 131-171, January.
    7. Benjamin H. Liebman & Kara M. Reynolds, 2015. "Trade Liberalisation and Capital Spending by US Manufacturers," The World Economy, Wiley Blackwell, vol. 38(11), pages 1763-1780, November.
    8. Chad Bown, 2013. "How Different Are Safeguards from Antidumping? Evidence from US Trade Policies Toward Steel," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(4), pages 449-481, June.
    9. Bown, Chad & Crowley, Meredith A., 2016. "The Empirical Landscape of Trade Policy," CEPR Discussion Papers 11216, C.E.P.R. Discussion Papers.
    10. Bruce Blonigen & Benjamin Liebman & Wesley Wilson, 2013. "Antidumping and Production-Line Exit: The Case of the US Steel Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 42(4), pages 395-413, June.

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    More about this item

    Keywords

    Market structure; Nonequivalence of tariffs and quotas; VRAs; Antidumping; Mini-mills;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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