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

LICOS Discussion Paper No. 176/2006

37 Pages Posted: 28 Nov 2006  

Hylke Vandenbussche

Catholic University of Leuven (KUL), LICOS & CEPR

Ziga Zarnic

Organization for Economic Co-Operation and Development (OECD)

Multiple version iconThere are 2 versions of this paper

Date Written: August 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 Classification: F13, L13, L61

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: https://ssrn.com/abstract=947447 or http://dx.doi.org/10.2139/ssrn.947447

Hylke Vandenbussche (Contact Author)

Catholic University of Leuven (KUL), LICOS & CEPR ( email )

Faculty of Economics
Naamsestraat 69
B-3000 Leuven, 3000
Belgium
+32 16 326 920 (Phone)
+32 16 326 732 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/public/NDBAD40/

Ziga Zarnic

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

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