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Asset Specificity, Corporate Protection and Trade Policy: Firm-Level Evidence from Antidumping Petitions in Nineteen Jurisdictions

Published online by Cambridge University Press:  05 April 2021

Benjamin C. K. Egerod Open the ORCID record for Benjamin C. K. Egerod [Opens in a new window]  and
Mogens K. Justesen Open the ORCID record for Mogens K. Justesen [Opens in a new window]
Benjamin C. K. Egerod
Affiliation:
Copenhagen Business School, Copenhagen, Denmark
Mogens K. Justesen*
Affiliation:
Copenhagen Business School, Copenhagen, Denmark
*
*Corresponding author. E-mail: mkj.egb@cbs.dk
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Abstract

This letter provides firm-level evidence that policy makers tailor trade policy to suit selected firms. It argues that firms with higher levels of specific assets find it more costly to reorganize production, and are hurt more by international competition. In response, policy makers grant more trade protection to firms with fixed assets. Since protectionism is costly, firms compete for it, which creates diffusion dynamics in which the protection granted to one firm affects the protection granted to others. This claim is tested utilizing the special role antidumping duties (ADDs) play in international trade, and combining petitions for ADDs with financial data on the firms filing them in a unique dataset. Using spatial autoregressive models, the authors find that firms with specific assets are granted more protection. However, diffusion dynamics differ within and between groups of firms producing the same good. This suggests that firms can partly shape their own level of trade protection.

Keywords

trade policyinequalities in the cost of free tradeprotectionismfirm levelpolitical influencediffusion of trade protection
Type
Letter
Information
British Journal of Political Science , Volume 52 , Issue 3 , July 2022 , pp. 1472 - 1481
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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https://doi.org/10.7910/DVN/1WZRY2
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