Working Paper: CEPR ID: DP6724
Authors: Jozef Konings; Hylke Vandenbussche
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
JEL Codes: 030; C2; F13; L41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| AD protection (Y20) | productivity gains for laggard firms (D22) |
| AD protection (Y20) | productivity losses for frontier firms (L25) |
| productivity gains for laggard firms (D22) | overall productivity of protected firms (L25) |
| AD protection (Y20) | loss in domestic consumer surplus (D11) |
| AD protection (Y20) | suboptimal exit levels (I21) |
| frontier firms productivity losses (F12) | overall productivity of protected firms (L25) |