Working Paper: CEPR ID: DP3571
Authors: Jozef Konings; Hylke Vandenbussche
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: antidumping; cases; european producers; market power; price cost markups
JEL Codes: F13; L13; L41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Antidumping protection (F18) | Increased price-cost margins (L11) |
| Increased price-cost margins (L11) | Increased market power (D43) |
| Antidumping protection (F18) | Increased market power (D43) |
| No protective measures (D18) | No increase in market power (D41) |
| Antidumping protection (F18) | Increased markups (D49) |