Wednesday, January 30, 2013

Jean Baptiste, call your office

Your law--that supply is implicit demand--has just been rediscovered by Hylke Vandenbussche and Jozef Konigs;
Domestic French firms without any international activity benefit from import protection and see their domestic sales rise while exporters, especially those belonging to a global network, lose sales relative to unprotected firms. More in particular we find that antidumping protection raises firm-level domestic sales of non-exporters by 5%. For exporters, we find that antidumping protection lowers their exports abroad by about 8% and this fall is not compensated by an increase in exporters’ domestic sales, which also fall by around 4%. At the product level, extra-EU French exports drop by 36% while total extra-EU exports fall by 21%. We verified that these results are not driven by retaliation policy, endogeneity or the choice of control group.
Say's Law; an oldie, but a goodie.

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