Heterogeneous Responses of Firms to Trade Protection

Jozef Konings and Hylke Vandenbussche ()

No 6724, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper uses EU firm-level panel data to estimate the effect of Antidumping (AD) protection on the productivity of EU domestic firms in import-competing industries. We find that firms with relatively low initial productivity - laggard firms - have productivity gains during AD protection, while firms with high initial productivity - frontier firms - experience productivity losses. While the productivity of the average firm is moderately improved during AD protection, productivity remains below that of firms never involved in AD cases, thus questioning the desirability of protection. Our empirical results are consistent with recent theoretical work supporting the view that trade policy can have a differential effect on firms depending on their initial productivity.

Keywords: antidumping protection; firm heterogeneity; total factor productivity (search for similar items in EconPapers)
JEL-codes: C2 F13 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff and nep-int
Date: 2008-02
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Journal Article: Heterogeneous responses of firms to trade protection (2008)
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