Trade Protection and Market Power: Evidence from US antidumping and countervailing duties

Contingent protection measures were originally intended to protect domestic
producers from what were considered to be “unfairly” cheap imports. However, due
to the way in which these policies are designed and implemented, they have been
heavily criticised for their greatly disruptive effects on markets, and particularly
on competition. The analysis presented in this paper contributes to the debate by
studying the impact of US Antidumping (AD) and Countervailing (CV) duties on
domestic producers’ price-cost margins (PCM). To this end, the study takes advantage
of a long panel of 4-digit industries in the US covering 26 years of AD/CV
activity, including the periods before and after the changes to AD/CV laws introduced
following the Uruguay Round (UR). It finds evidence of a positive effect of
AD/CV duties on PCM for the period prior to the UR, but the effect seems to
disappear in the years following the UR. The analysis accounts for potential endogeneity
in AD/CV duties, as well as the intensity of the protection granted.