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Vertical Integration and Trade Protection: The Case of Antidumping Duties

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  • Maya Cohen-Meidan

    (Stanford University)

Abstract

This paper analyzes the interaction of trade policy with the vertical structures of foreign firms exporting goods to the United States, focusing on the case of antidumping duties. I use a model that incorporates both vertical structure and the dynamics of U.S. antidumping duties to show that the policy has a notably different impact on vertically integrated and non-integrated foreign firms. I then successfully test the theoretical predictions using data on 489 antidumping cases. In particular, I find that non-integrated firms are more likely than vertically integrated firms to exit the U.S. market following the imposition of duties, and less likely to pass the duties on to consumers for certain products. My empirical findings also indicate that antidumping duties oscillate between low and high levels -a previously unnoticed, surprising and most-likely unintended consequence of the design of U.S. antidumping policy that is nevertheless predicted by my model.

Suggested Citation

  • Maya Cohen-Meidan, 2009. "Vertical Integration and Trade Protection: The Case of Antidumping Duties," Discussion Papers 08-034, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:08-034
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    References listed on IDEAS

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    More about this item

    Keywords

    Vertical Intrgration; antidumping duties; trade policy;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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