The Long-Lasting Protection of a Defunct Industrial Policy

Eugenio Miravete and Maria Moral

No 20525, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The Spanish industrial policy prohibited automobiles imports from 1939 to 1986, when Spain joined the European Union. Despite trading freely with other European countries ever since, Spaniards still show a strong preference for automobile brands with production facilities established in Spain during the autarkic period. We specify a multi-product oligopoly equilibrium model and jointly estimate demand and supply. This rich framework allows us to quantify the current tariff equivalence of these biased preferences induced by an industrial policy phased out decades ago. Our results show that domestic automakers enjoy today a sizable advantage equivalent to an 8.5% tariff, even thirty years after the industrial policy was phased out. This protection is not negligible when compared to the 10.3% import duty applied by the EU. The Spanish experience illustrates the potential benefits and pitfalls of the current European protective policy against Chinese imports.

JEL-codes: F15 L13 L52 L62 (search for similar items in EconPapers)
Date: 2025-08
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