Does Antidumping Protection Raise Market Power? Evidence from Firm Level Data

Hylke Vandenbussche and Jozef Konings

No 3571, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper empirically tests the effects of Anti-Dumping (AD) protection on the price-cost margin of firms. To this end, we use a rich panel data set of 1,666 EU producers that were involved in AD cases initiated in 1996. Our findings indicate that price-cost margins in most cases significantly increase in the period of protection compared to a period before protection. In industries where competition is very tough before protection, we fail to find an increase in price-cost margins, while in industries with positive mark-ups before protection, trade policy raises market power between 3% points and 15% points, depending on the sector. Our results are robust to alternative specifications and estimation techniques. Our findings are also consistent with recent theoretical models that deal with the economic effects of firm behavior in response to AD protection.

Keywords: market power; Price-cost markups; Antidumping cases; European producers (search for similar items in EconPapers)
JEL-codes: F13 L13 L41 (search for similar items in EconPapers)
Date: 2002-10
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (6)

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