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Did US Safeguard Protection on Steel Affect Market Power of European Steel Producers?

Hylke Vandenbussche
Catholic University of Leuven (KUL) ; CORE. Center for Operations Research and Economics; Centre for Economic Policy Research (CEPR)

Ziga Zarnic
Catholic University of Leuven (KUL) - Faculty of Business and Economics (FBE) ; European Union - European Commission

August 2006

LICOS Discussion Paper No. 176/2006

Abstract:
This paper empirically investigates the effects of US safeguard protection on steel imports in 2002 on the mark-ups of EU steel producers. We identify a large panel of European steel producers between 1995 and 2004 affected by the safeguards. Using the Roeger method, our results show that US safeguards significantly reduced EU firms' mark-ups. Single-product EU steel firms suffered relatively more from the protection than multi-product firms. Controlling for firm heterogeneity, these results are robust to alternative specifications. Our evidence further suggests that US protection resulted in some rerouting of European steel especially towards China, aggravating the situation on the Chinese steel market and ultimately resulting in Chinese trade protection of steel imports.

Keywords: Firm data, Markups, Safeguards, Steel industry, Trade deflection

JEL Classifications: F13, L13, L61

Working Paper Series

Date posted: November 28, 2006 ; Last revised: November 28, 2006

Suggested Citation

Vandenbussche, Hylke and Zarnic, Ziga, Did US Safeguard Protection on Steel Affect Market Power of European Steel Producers? (August 2006). LICOS Discussion Paper No. 176/2006. Available at SSRN: http://ssrn.com/abstract=947447

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Hylke Vandenbussche (Contact Author) Catholic University of Leuven (KUL) ( email ) B-3000 Leuven Belgium +32 16 326 920 (Phone) +32 16 326 732 (Fax)
CORE. Center for Operations Research and Economics ( email ) 34 Voie du Roman Pays B-1348 Louvain-la-Neuve b-1348 Belgium
Centre for Economic Policy Research (CEPR) 90-98 Goswell Road London EC1V 7RR United Kingdom
Ziga Zarnic Catholic University of Leuven (KUL) - Faculty of Business and Economics (FBE) ( email ) Naamsestraat 69 B-3000 Leuven 3000 Belgium
European Union - European Commission Rue de la Loi 200 B-1049 Brussels Belgium

Abstract

References (41)

Date posted: November 28, 2006 ; Last revised: November 28, 2006

Suggested Citation

Contact Information

Hylke Vandenbussche (Contact Author)

Ziga Zarnic