Antidumping and Production-Line Exit: The Case of the US Steel Industry (original) (raw)

Leveling the playing field : antidumping and the U.S. steel industry

1999

Driven by mercantilist trade distortions that underlie the global economic crisis, foreign exports of steel to the United States have hit record levels in 1998 and are continuing at high levels in 1999. This sudden flood of steel into the United States has forced U.S. steel mills to close or slow production and put thousands of steel workers out of work. These problems have, in turn, sparked a debate over what response, if any, the U.S. government should pursue. This paper analyzes the causes and impact of the surge in steel imports and analyzes the appeal of various policy responses, including U.S. trade laws aimed at countering unfair trade practices, such as subsidization and dumping.

Entry, Exit and Establishment Survival in UK Manufacturing

Journal of Industrial Economics, 2003

We study entry, exit and survival of UK manufacturing establishments from 1986 to 1991 using the newly released ARD database. We document patterns of entry and exit across industries and over time. We estimate an augmented Cox proportional hazard to examine the survival of new plants in the UK in this period. We ¢nd interactions between survival, size and age of establishment that di¡er between establishments that are singles and part of a group. We speculate that this ¢nding may be consistent with market selection models based on learning.

The Deaths of Manufacturing Plants

SSRN Electronic Journal, 2000

This paper examines the causes of manufacturing plant deaths within and across industries in the U.S. from 1977-1997. The effects of international competition from low wage countries, exporting, ownership structure, product diversity, productivity, geography, and plant characteristics are considered.

Antidumping Protection and Productivity Growth of Domestic Firms

In this Paper we provide empirical evidence that Antidumping (AD) Protection can induce technological catching-up by domestic firms affected by the import protection. We identify a panel of 1,793 import-competing domestic firms between 1993 and 2000, directly affected by AD cases that were initiated in 1996. Using a difference-in-difference approach, we find evidence of increased Total Factor Productivity (TFP) growth for firms protected by AD measures compared to firms that did not receive protection. Our analysis indicates, however, that the effect of protection depends on the ‘distance to the frontier firm’ in the industry. While protection raises TFP growth of ‘laggard’ firms, the reverse holds for domestic firms that are close to the efficiency frontier. These results confirm recent theoretical work supporting the view that protection can induce technological catching-up.

Does Antidumping Protection raise Market Power of Domestic Firms? Evidence from Firm Level Data

Since unification, the debate about Germany's poor economic performance has focused on supply-side weaknesses, and the associated reform agenda sought to make low-skill labour markets more flexible. We question this diagnosis using three lines of argument. First, effective restructuring of the supply side in the core advanced industries was carried out by the private sector using institutions of the coordinated economy, including unions, works councils and blockholder owners. Second, the implementation of orthodox labour market and welfare state reforms created a flexible labour market at the lower end. Third, low growth and high unemployment are largely accounted for by the persistent weakness of domestic aggregate demand, rather than by the failure to reform the supply side. Strong growth in recent years reflects the successful restructuring of the core economy. To explain these developments, we identify the external pressures on companies in the context of increased global co...

Measuring Industry Specific Protection: Antidumping in the United States

1994

This paper provides estimates of the trade impacts of U.S. antiduznping law and the detemilnants of suit filing activity from 1980-1985. We study three possible channels through which the threat or mere possibility of antidumping duties can restrict trade which we believe, when combined with the direct effects of duties, capture most of the trade effects of antidumping Jaw. We refer to these three non-duty effects as the Investigation effect, the suspension effect, and the withdrawal effect. Investigation effects occur when an antiduinping investigation takes place; suspension effects occur under so-called "suspension agreements"; and withdrawal effects occur after a petition is simply withdrawn without a final detcm,ination. We find substantial trade restrictions associated with the first two effects, but not with the third. Finally, we find evidence suggesting that some firms inkinie antidumping procedures for the trade restricting investigation effects alone.

Antitrust versus industrial policies, entry and welfare

DESCRIPTION In industries with large sunk costs, the investment strategy of competing firms depends on the regulatory context. We consider ex-ante industrial policies in which the sunk cost may be either taxed or subsidized, and antitrust policies which could be either pro-competitive (leading to divestiture in case of high ex-post profitability) or lenient (allowing mergers in case of low ex-post profitability). Through a simple entry game we completely characterize the impact of these policies and examine their associated dynamic trade-offs between the timing of the investment, the ex-post benefits for the consumers, and the possible duplication of fxed costs. We find that merger policies are dominated by ex-ante industrial policies, whereas the latter are dominated by divestiture policies only under very special circumstances.

Anti-dumping Measures in the HR Steel Industry.pdf

In this essay, I have focussed on Hot-Rolled (HR) Steel, i.e. the most basic carbon steel used to manufacture products with uncritical surface finish, including automotive, water heaters, etc.5 The HR Steel industry is an Oligopolistic Market with a Herfindahl Index of 2470. The bulk of the industry is controlled by TATA Steel, JSW Steel, and SAIL (Steel Authority of India Ltd.).6 Hence, these firms faced significant setbacks of the industrial downturn during 2015-17. However, the Indian Government took measures towards countering the impact by implementing two prominent Anti- Dumping policies: the Anti-Dumping Duty (ADD), and the Minimum Import Price (MIP).7 In order to study the effectiveness of these measures in ameliorating the profitability of the firms, I chose to research: To what extent have the anti-dumping measures, viz ADD and MIP adopted in 2016-17 improved the profitability of the three dominant firms in the oligopolistic HR steel industry of Mumbai? Considering the highly dispersed firm recoveries, I speculate that ADD and MIP were not the only, or major driving forces; defence targeted via aversion and circumvention, i.e. alternative routes to recovery unique to each firm would have played a significant role in overcoming dumping hazards as well. The impact on profitability and impetus for aversion policies has been analysed using the trade models of transformation curve and consumer trade-off between imported and domestically manufactured steel, change in imports/exports, sales volumes, and resource productivity of firms, indicated by general indices such as the Balassa index and the Grubel-Lloyd Index. The essay is pertinent to the current scenario as it ventures into findings not undertaken hitherto, and presents original premises contrasting and evaluating state policy and market measures. The study of effectiveness of anti-dumping is not only vital for planning macroeconomic stability vis-a-vis state intervention and market distortion, but also at a microeconomic level wherein dynamics of a concentrated industry may be evaluated via impact of anti-dumping on and incentives received by individual firms.

The Impact of Cost Changes on Industry Entry and Exit

Journal of Economics, 2007

Increases in costs may have interesting, non-obvious effects on industry entry and exit. Three cases are possible when costs rise: the competitor neutral case, in which entry decreases and exit increases, entrant favoring, in which entry and exit both increase, and incumbent favoring, in which entry and exit both decrease. The model places restrictions on which outcomes are possible given which costs rise (marginal or fixed). The restrictions allow one to infer the nature of the cost increases even when costs are not observed. The model can be used to examine the impacts of cost-increasing regulation or exogenous process innovation on industry entry and exit.