Antidumping protection and markups of domestic firms

This paper tests whether Antidumping (AD) protection affects the market power of import-competing domestic firms. We use panel data of about 4000 EU producers that were involved in AD cases to estimate markups before and after the filing of a case. Our findings indicate that AD protection has positive and significant effects on domestic markups, except in cases where import diversion after protection is strong, like in 'seamless steel tubes'. Our results control for potential endogeneity of AD filings. A randomly drawn control group of firms not subject to AD policy did not have rising markups during the same period. (C) 2004 Elsevier B.V. All rights reserved.