Using safeguard protection to raise domestic rivals' costs

James P. Durling, Thomas J. Prusa

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

The primary impact of import protection is to raise foreign firms' costs. We show that poorly designed protection also raises domestic rivals' costs. We find that simultaneously taxing both the upstream and downstream import markets results in a very small expansion in industry-wide downstream production. We use the US' recent steel safeguard action as a case study. Our analysis sheds new light on the controversial steel slab restrictions. We show that the primary effect of the steel tariffs is distributional. In particular, the steel tariffs will mainly benefit minimills and will provide relatively small benefits to traditional mills.

Original languageEnglish (US)
Pages (from-to)47-68
Number of pages22
JournalJapan and The World Economy
Volume15
Issue number1
DOIs
StatePublished - Jan 2003

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

Keywords

  • Protection
  • Raising rivals' costs
  • Steel

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