Stock market data and trade policy: dumping and the semiconductor industry

This article uses stock market data to examine the effects of cost-based dumping and the subsequent trade agreements between the United States and Japan on U.S. semiconductor firms. Our empirical results show that the initial indication of dumping by Japanese semiconductor firms had a significant negative impact on stock prices of U.S. firms. On the other hand, the subsequent market-sharing trade agreement, under which Japan agreed to prevent the dumping of Japan-manufactured chips in the United States and the United States agreed to suspend the application of antidumping duties, had a positive impact on the stock prices of U.S. semiconductor firms. Our findings support the neoclassical trade theory that the imposition of import relief leads to a wealth transfer to producers.