Are All Trade Policies Created Equal? Empirical Evidence for Nonequivalent Market Power E?ects of Tari?s and Quotas

18/06/2015 10:28 - 593 Views

Bruce A. Blonigen (University of Oregon and NBER), Benjamin H. Liebman

(St. Joseph’s University), Justin R. Pierce (Board of Governors of the Federal Reserve System), Wesley W. Wilson (University of Oregon)

Abstract:

Over the past 50 years, the steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based. We exploit this extensive heterogeneity in trade protection to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Using plant-level Census Bureau data for steel plants from 1967-2002, we find evidence for significant market power effects for binding quota-based protection, but not tariff-based protection, particularly with respect to integrated and minimill steel producers. Our results are robust to calculation with two standard measures of market power and controlling for potential endogeneity of trade policies.

Source: http://ssrn.com