Are All Trade Policies Created Equal? Empirical Evidence for Nonequivalent Market Power Effects of Tariffs and Quotas

37 Pages Posted: 8 May 2012

See all articles by Bruce A. Blonigen

Bruce A. Blonigen

University of Oregon - Department of Economics; National Bureau of Economic Research (NBER)

Justin R. Pierce

Board of Governors of the Federal Reserve System

Benjamin H. Liebman

St. Joseph's University

Wesley W. Wilson

University of Oregon - Department of Economics

Date Written: April 10, 2012

Abstract

Over the past 50 years, the steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based. We exploit this extensive heterogeneity in trade protection to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Using plant-level Census Bureau data for steel plants from 1967-2002, we find evidence for significant market power effects for binding quota-based protection, but not tariff-based protection, particularly with respect to integrated and minimill steel producers. Our results are robust to calculation with two standard measures of market power and controlling for potential endogeneity of trade policies.

Keywords: Market structure, nonequivalence of tariffs and quotas, voluntary restraint agreements, antidumping, mini-mills

JEL Classification: F13, F23, L11

Suggested Citation

Blonigen, Bruce A. and Pierce, Justin R. and Liebman, Benjamin H. and Wilson, Wesley W., Are All Trade Policies Created Equal? Empirical Evidence for Nonequivalent Market Power Effects of Tariffs and Quotas (April 10, 2012). FEDS Working Paper No. 2012-17, Available at SSRN: https://ssrn.com/abstract=2054764 or http://dx.doi.org/10.2139/ssrn.2054764

Bruce A. Blonigen

University of Oregon - Department of Economics ( email )

1285 University of Oregon
Eugene, OR 97403
United States
541-346-4680 (Phone)
541-346-1243 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Justin R. Pierce (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

HOME PAGE: http://www.justinrpierce.com/

Benjamin H. Liebman

St. Joseph's University ( email )

5600 City Avenue,
Philadelphia, PA 19131
United States

Wesley W. Wilson

University of Oregon - Department of Economics ( email )

1285 University of Oregon
Eugene, OR 97403
United States
541-346-4690 (Phone)

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