Did US Safeguard Protection on Steel Affect Market Power of European Steel Producers?
Catholic University of Leuven (KUL), LICOS & CEPR
Organization for Economic Co-Operation and Development (OECD)
LICOS Discussion Paper No. 176/2006
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.
Number of Pages in PDF File: 37
Keywords: Firm data, Markups, Safeguards, Steel industry, Trade deflection
JEL Classification: F13, L13, L61
Date posted: November 28, 2006