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Vertical Integration and Trade Protection: The Case of Antidumping Duties

  • Maya Cohen-Meidan

    (Stanford University)

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    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. David Weinstein & Christian Broda, 2004. "Globalization and the Gains from Variety," Econometric Society 2004 North American Summer Meetings 508, Econometric Society.
    2. Bruce A. Blonigen & Jee-Hyeong Park, 2000. "Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence," University of Oregon Economics Department Working Papers 2003-22, University of Oregon Economics Department, revised 01 Jun 2003.
    3. Thomas J. Prusa, 1997. "The Trade Effects of U.S. Antidumping Actions," NBER Chapters, in: The Effects of U.S. Trade Protection and Promotion Policies, pages 191-214 National Bureau of Economic Research, Inc.
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    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. 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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