Steel safeguards and the welfare of U.S. steel firms and downstream consumers of steel: a shareholder wealth perspective

Benjamin H. Liebman and Kasaundra M. Tomlin

Canadian Journal of Economics, 2007, vol. 40, issue 3, pages 812-842

Abstract: This paper analyses the steel safeguards applied during 2001-3. Results reveal that for shareholders of U.S. steel companies safeguards generated positive `abnormal' returns of approximately 6%. The cancellation of the safeguards resulted in wealth gains of about 5%. Steel shareholders experienced negative abnormal returns of 5% in response to the WTO ruling that the U.S. had violated WTO law. Our results are consistent with the neoclassical view that producers gain at the expense of consumers. Also, findings indicate that downstream-consuming firms that diversify production in NAFTA countries avert some trade policy risk associated with higher steel costs caused by safeguard protection.

JEL-codes: F13 F23 (search for similar items in EconPapers)
Date: 2007

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Related works:
Working Paper: Steel Safeguards and the Welfare of U.S. Steel Firms and Downstream Consumers of Steel: A Shareholder Wealth Perspective (2006)
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