Heterogeneous responses of firms to trade protection |
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Authors: | Jozef Konings Hylke Vandenbussche |
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Affiliation: | a Department of Economics and CORE, Université Catholique de Louvain, Place Montesquieu 3, 1348 Louvain-la-neuve, Belgium b Department of Economics and LICOS and VIVES, Catholic University of Leuven, Naamsestraat 69, 3000 Leuven, Belgium |
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Abstract: | This paper estimates the effect of antidumping protection on the productivity of domestic import-competing firms. Two key results emerge. First, the productivity of the average firm receiving protection moderately improves, but this is never sufficient to close the productivity gap with firms never involved in antidumping cases. Second, allowing for firm heterogeneity reveals that domestic firms with relatively low initial productivity - laggard firms - have productivity gains during protection, while firms with high initial productivity - frontier firms - experience productivity losses during protection. These results are consistent with recent theories showing that trade policy affects firms differently depending on their initial productivity. |
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Keywords: | Total factor productivity Antidumping protection Firm heterogeneity |
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