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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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  • Bruce Blonigen
  • Benjamin Liebman
  • Justin Pierce
  • Wesley Wilson

Abstract

The steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based, over the past decades. This extensive heterogeneity in trade protection provides the opportunity to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Robust to a variety of empirical specifications with U.S. Census data on the population of U.S. steel plants from 1967-2002, we find evidence for significant market power effects for binding quota-based protection, but not for tariff-based protection. There is only weak evidence that antidumping protection increases market power.

Suggested Citation

  • Bruce Blonigen & Benjamin Liebman & Justin Pierce & Wesley Wilson, 2010. "Are All Trade Protection Policies Created Equal? Empirical Evidence for Nonequivalent Market Power Effects of Tariffs and Quotas," Working Papers 10-27, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:10-27
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. Bown, Chad P. & Crowley, Meredith A, 2016. "The Empirical Landscape of Trade Policy," CEPR Discussion Papers 11216, C.E.P.R. Discussion Papers.
    4. 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.
    5. repec:pri:cepsud:230deloecker is not listed on IDEAS
    6. Alan ASPRILLA & Nicolas BERMAN & Olivier CADOT & Melise JAUD, 2016. "Trade Policy and Market Power: Firm-level Evidence," Working Papers P161, FERDI.
    7. 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.
    8. Alan ASPRILLA & Nicolas BERMAN & Olivier CADOT & Melise JAUD, 2016. "Trade Policy and Market Power: Firm-level Evidence," Working Papers P161, FERDI.

    More about this item

    Keywords

    Market structure; Nonequivalence of tariffs and quotas; VRAs; Antidumping; Mini-mills;

    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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