Trade and Industrial Policy for a 'Declining?' Industry: the case of the U.S. Steel Industry

Richard G. Harris

No 275221, Queen's Institute for Economic Research Discussion Papers from Queen's University - Department of Economics

Abstract: An intertemporal partial equilibrium model of the U.S. steel industry is developed which stresses imperfect competition, and the interaction between the large declining integrated steel producers and the entry of the new efficient mini-mills. A central question is whether trade and industrial policy should favour one sector at the expense of another. The existing policy of 'IRA's on steel is estimated to have a welfare cost of equal to 6.5 percent of the present value of base consumption. Furthermore, it is shown that the joint presence of imperfect competition and rent-shifting 'IRA's implies that a partial tightening of the steeel quotas would lead ,to an improvement in national welfare which si quantitatively significant, even though free trade in steel is the globally optimal policy.

Keywords: Financial Economics; International Development (search for similar items in EconPapers)
Pages: 45
Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:ags:queddp:275221

DOI: 10.22004/ag.econ.275221

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