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The US-Japan Semiconductor Agreement


  • Baldwin, Richard


The semiconductor arrangement was intended to enhance free trade based on market principles. This paper argues that the arrangement had exactly the opposite effect. The arrangement has two parts: a price floor to prevent predatory pricing, and provisions to double U.S. market share in Japan to counter market closure. Given semiconductor production technology, the price floor forced a capacity reduction, a rise in world prices and a cartelization of the market. Since the observed dumping was probably not predatory pricing, the price floor restricted competition and free trade. The market closure probably exists and significantly harms non-Japanese producers. It is therefore an anti-competitive practice.

Suggested Citation

  • Baldwin, Richard, 1990. "The US-Japan Semiconductor Agreement," CEPR Discussion Papers 387, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:387

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