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Heterogeneous Responses of Firms to Trade Protection

Author

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  • Konings, Jozef
  • Vandenbussche, Hylke

Abstract

This paper uses EU firm-level panel data to estimate the effect of Antidumping (AD) protection on the productivity of EU domestic firms in import-competing industries. We find that firms with relatively low initial productivity - laggard firms - have productivity gains during AD protection, while firms with high initial productivity - frontier firms - experience productivity losses. While the productivity of the average firm is moderately improved during AD protection, productivity remains below that of firms never involved in AD cases, thus questioning the desirability of protection. Our empirical results are consistent with recent theoretical work supporting the view that trade policy can have a differential effect on firms depending on their initial productivity.

Suggested Citation

  • Konings, Jozef & Vandenbussche, Hylke, 2008. "Heterogeneous Responses of Firms to Trade Protection," CEPR Discussion Papers 6724, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6724
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    References listed on IDEAS

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    More about this item

    Keywords

    antidumping protection; firm heterogeneity; total factor productivity;

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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