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Vertical Integration and Trade Protection: The Case of Antidumping Duties

  • Maya Cohen-Meidan

    (Stanford University)

Registered author(s):

    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.

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    File URL: http://www-siepr.stanford.edu/repec/sip/08-034.pdf
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    Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 08-034.

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    Date of creation: Mar 2009
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    Handle: RePEc:sip:dpaper:08-034
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    1. Antràs, Pol & Helpman, Elhanan, 2004. "Global Sourcing," CEPR Discussion Papers 4170, C.E.P.R. Discussion Papers.
    2. Antràs, Pol & Staiger, Robert, 2008. "Offshoring and the Role of Trade Agreements," CEPR Discussion Papers 6966, C.E.P.R. Discussion Papers.
    3. Christian Broda & David Weinstein, 2004. "Globalization and the gains from variety," Staff Reports 180, Federal Reserve Bank of New York.
    4. Thomas J. Prusa, 1996. "The Trade Effects of U.S. Antidumping Actions," Departmental Working Papers 199603, Rutgers University, Department of Economics.
    5. J. M. Finger, 1981. "The Industry-Country Incidence of "Less than Fair Value" Cases in US Import Trade," NBER Chapters, in: Export Diversification and the New Protectionism: The Experience of Latin America, pages 260-279 National Bureau of Economic Research, Inc.
    6. Giovanni S.F. Bruno, 2004. "Approximating the Bias of the LSDV Estimator for Dynamic Unbalanced Panel Data Models," KITeS Working Papers 159, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2004.
    7. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2005. "Importers, Exporters, and Multinationals: A Portrait of Firms in the U.S. that Trade Goods," Working Paper Series WP05-10, Peterson Institute for International Economics.
    8. Robert C. Feenstra, 1997. "Introduction to "The Effects of U.S. Trade Protection and Promotion Policies"," NBER Chapters, in: The Effects of U.S. Trade Protection and Promotion Policies, pages 1-7 National Bureau of Economic Research, Inc.
    9. Bruce A. Blonigen & Jee-Hyeong Park, 2004. "Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence," American Economic Review, American Economic Association, vol. 94(1), pages 134-154, March.
    10. Gallaway, Michael P. & Blonigen, Bruce A. & Flynn, Joseph E., 1999. "Welfare costs of the U.S. antidumping and countervailing duty laws," Journal of International Economics, Elsevier, vol. 49(2), pages 211-244, December.
    11. Emanuel Ornelas & John L. Turner, 2012. "Protection and International Sourcing," Economic Journal, Royal Economic Society, vol. 122(559), pages 26-63, 03.
    12. Harrison, Ann, 1991. "The new trade protection : price effects of antidumping and countervailing measures in the United States," Policy Research Working Paper Series 808, The World Bank.
    13. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    14. Gene M. Grossman & Elhanan Helpman, 2002. "Integration Versus Outsourcing In Industry Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 85-120, February.
    15. Bruce A. Blonigen & Stephen E. Haynes, 2002. "Antidumping Investigations and the Pass-Through of Antidumping Duties and Exchange Rates," American Economic Review, American Economic Association, vol. 92(4), pages 1044-1061, September.
    16. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
    17. Ornelas, Emanuel & Turner, John L., 2008. "Trade liberalization, outsourcing, and the hold-up problem," Journal of International Economics, Elsevier, vol. 74(1), pages 225-241, January.
    18. repec:hrv:faseco:4784029 is not listed on IDEAS
    19. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
    20. Salvatore, Dominick, 1987. "Import penetration, exchange rates, and protectionism in the United States," Journal of Policy Modeling, Elsevier, vol. 9(1), pages 125-141.
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