Foreign subsidization and the excess capacity hypothesis
By: Bruce A. Blonigen, Wesley W. Wilson.
Contributors: Wilson, Wesley W.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11798; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11798.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Steel industry and trade -- United States.; Imports -- United States.; Export subsidies.; Dumping (International trade)
Description: "The U.S.  steel industry contends foreign-subsidized excess capacity has led to its long-run demise, yet no one has formally examined this hypothesis.  In this paper, we incorporate foreign subsidization considerations into a model based on Staiger and Wolak's (1992) cyclical-dumping framework and demonstrate that foreign export supply responses to foreign demand shocks depend critically on whether foreign firms have subsidized excess capacity.  We then test the excess capacity hypothesis using detailed product and country data on steel exports to the U.S.  market from 1979 through 2002, and find strong statistical evidence that rejects the U.S.  steel industry's foreign excess capacity claims.  Our empirical methodology may be applicable to many other products, including agricultural markets that have been the subject of intense discussions within the WTO"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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