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Could the U.S. Iron Industry Have Survived Free Trade After the Civil War?

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  • Douglas A. Irwin

Abstract

An unresolved question concerning post-Civil War U.S. industrialization is the degree to which import tariffs protected domestic manufacturers from foreign competition. This paper considers the impact of import tariffs on the domestic pig iron industry, the basic building block of the entire iron and steel industry. After reviewing the contentious political debate surrounding the pig iron duties and estimating the elasticity of substitution between domestic and imported pig iron, a standard trade model provides estimates of how tariff reductions would affect domestic prices, production, imports, and welfare. The results suggest that, had the tariff been eliminated in 1869, domestic output would fall by about 15 percent and the import market share would rise from about 7 percent to nearly 30 percent. These relatively modest effects suggest that a substantial portion of the domestic industry could have survived a significant tariff reduction.

Suggested Citation

  • Douglas A. Irwin, 2000. "Could the U.S. Iron Industry Have Survived Free Trade After the Civil War?," NBER Working Papers 7640, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7640
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    References listed on IDEAS

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    1. Harley, C. Knick, 1992. "The antebellum American tariff: Food exports and manufacturing," Explorations in Economic History, Elsevier, vol. 29(4), pages 375-400, October.
    2. Clinton Shiells & Robert Stern & Alan Deardorff, 1989. "Estimates of the elasticities of substitution between imports and home goods for the United States: Reply," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 125(2), pages 371-374, June.
    3. Reinert, Kenneth A. & Roland-Holst, David W., 1992. "Armington elasticities for United States manufacturing sectors," Journal of Policy Modeling, Elsevier, vol. 14(5), pages 631-639, October.
    4. Fogel, Robert W & Engerman, Stanley L, 1969. "A Model for the Explanation of Industrial Expansion during the Nineteenth Century: With an Application to the American Iron Industry," Journal of Political Economy, University of Chicago Press, vol. 77(3), pages 306-328, May/June.
    5. Head, Keith, 1994. "Infant industry protection in the steel rail industry," Journal of International Economics, Elsevier, vol. 37(3-4), pages 141-165, November.
    6. Bruce A. Blonigen & Wesley W. Wilson, 1999. "Explaining Armington: What Determines Substitutability Between Home and Foreign Goods?," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 1-21, February.
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    Cited by:

    1. Steinmueller, W. Edward, 2010. "Economics of Technology Policy," Handbook of the Economics of Innovation, Elsevier.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • N71 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: Pre-1913

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