The Economic Impact of the U.S. Export Trading Company Act

43 Pages Posted: 16 Aug 2006 Last revised: 29 May 2015

See all articles by Margaret C. Levenstein

Margaret C. Levenstein

University of Michigan at Ann Arbor - Survey Research Center; The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy

Valerie Y. Suslow

Johns Hopkins University - Carey Business School

Date Written: August 1, 2006

Abstract

This paper provides an empirical analysis of the limited immunity for export cartels offered by the United States' Export Trading Company Act (1982). We have assembled a data set of 195 Export Trade Certificates of Review - all those created from when the first certificate was granted in 1983 through the end of 2004. We provide descriptive statistics on these ETCs, including the types of firms that apply for these certificates and the nature of the restrictions placed upon them by the Department of Commerce and the Department of Justice. We then estimate the determinants of the real value of U.S. product-level manufacturing exports from 1978 through 2004. We find that, controlling for the growth rate of exports in the industry, on average ETCs do not increase exports. In some estimates, the real value of exports actually falls after receiving an ETC. There are two possible explanations for this. One is that firms choose to obtain an ETC Certificate of Review when they are concerned that exports in the sector are going to fall. Receiving an ETC thus precedes this fall in exports, but does not cause it. The second possible explanation is that industries with ETCs can in fact exercise market power and the decline in the real value of exports reflects a strategic reduction in the quantity of goods exported. Given the predominance of ETCs in relatively unconcentrated industries we believe the former explanation is more plausible.

Keywords: Export cartel, antitrust, Export Trading Company Act, Webb-Pomerene Act

JEL Classification: L13, K21, L41

Suggested Citation

Levenstein, Margaret C. and Suslow, Valerie Y., The Economic Impact of the U.S. Export Trading Company Act (August 1, 2006). Ross School of Business Paper No. 1036; Antitrust Law Journal , Vol. 27, No. 2, 2007. Available at SSRN: https://ssrn.com/abstract=924381 or http://dx.doi.org/10.2139/ssrn.924381

Margaret C. Levenstein

University of Michigan at Ann Arbor - Survey Research Center ( email )

500 S. State Street
Ann Arbor, MI 48109
United States
734-615-9088 (Phone)
734-647-1186 (Fax)

HOME PAGE: http://www-personal.umich.edu/~maggiel

The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy

Ann Arbor, MI 48109
United States
734-764-8336 (Phone)

Valerie Y. Suslow (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

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