Hostname: page-component-586b7cd67f-rdxmf Total loading time: 0 Render date: 2024-11-22T00:28:27.186Z Has data issue: false hasContentIssue false
  • English
  • Français

Signaling Costs: Why Don't More Firms Petition for Protection?

Published online by Cambridge University Press:  20 January 2017

Nisha Malhotra
Nisha Malhotra*
Affiliation:
University of British Columbia
Get access Rights & Permissions [Opens in a new window]

Abstract

The main aim is to question why we don't see more firms petitioning for import relief. It is well accepted that petitioning itself can restrain imports, lead to higher prices and hence higher profits (in the short run). What prevents more firms from filing for protection? It may be that petitioning reflects cost inefficiency on the part of the petitioning firm, and concerns about revealing this information might act as a deterrent for firms to come forward with their complaints. However, in a declining industry where a large number of firms are contemplating exit, petitioning could be a signal that the firm expects to remain in the market for the near future. The signaling hypothesis is tested by comparing the stock market response of an antidumping petition for petitioning firms and non-petitioning firms producing the same product.

Keywords

antidumpingevent studyUSFirm
Type
Article
Information
Business and Politics , Volume 10 , Issue 1 , April 2008 , pp. 1 - 24
Copyright
Copyright © V.K. Aggarwal 2008 and published under exclusive license to Cambridge University Press 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

[1] Araujo, P. A., Moreira, H. L. A. and Tsuchida, M. H. (2004) ”Do dividends signal more earnings?” Working Paper 524, Ensaios Economicos.Google Scholar
[2] Begley, J., Hughes, J., Rayburn, J. and Runkle, D. (1998) “Assessing the Impact of Export Taxes on Canadian Softwood Lumber,” Canadian Journal of Economics 31 (1), 297–319.Google Scholar
[3] Boehmer, E., Musumeci, J. and Poulsen, A. (1991) “Event-Study Methodology Under Conditions of Event-Induced Variance,” Journal of Financial Economics 30, 253–272.Google Scholar
[4] Blonigen, B. A. and Prusa, T. J. (2001) “Antidumping,” In Handbook of International Trade, Cambridge, ed. Harrigan, J. (Basil Blackwell, forthcoming)Google Scholar
[5] Blonigen, B. A., Tomlin, K. and Wilson, W. W. (2004) “Tariff-jumping FDI and Domestic Firms’ Profits,” Canadian Journal of Economics 37, 656–677.Google Scholar
[6] Blonigen, B. A. and Bown, C. (2003) “Antidumping and Retaliation Threats.” Journal of International Economics 60, 249–273.Google Scholar
[7] Brown, S. and Warner, J. (1985) “Using Daily Stock Returns: The Case of Event Studies,” Journal of Financial Economics 14, 3–31.CrossRefGoogle Scholar
[8] Campbell, J. Y., Lo, A. W. and Mackinlay, A. C. (1997) “Event-Study Analysis,” In The Econometrics of Financial Markets. (Princeton University Press, Princeton, NJ)Google Scholar
[9] Cassing, J. and To, T. (2004) “Antidumping, Signaling and Cheap Talk,” Manuscript.Google Scholar
[10] Grossman, G. (1986) “Imports as a Cause of Injury: The Case of the US Steel Industry,” Journal of International Economics 20, 201–23.Google Scholar
[11] Hartigan, J.C., Perry, P.R. and Kamma, S. (1989) “The Injury Determination Category and the Value of Relief from Dumping,” The Review of Economics and Statistics 71 (1), 183–86.Google Scholar
[12] Hughes, J. S., Lenway, S. and Rayburn, J. (1997) “Stock Price Effects of U.S. Trade Policy Responses to Japanese Trading Practices in Semi-Conductors,” The Canadian Journal of Economics 30 (4), 922–42.Google Scholar
[13] Karafiath, I. (1988) “Using Dummy Variables in the Event Methodology,” The Financial Review 23, 351–57.CrossRefGoogle Scholar
[14] Lenway, S., Morck, R. and Yeung, B. (1996) “Rent Seeking, Protectionism and Innovation in the American Steel Industry,” The Economic Journal 106, 410–421.Google Scholar
[15] Prusa, T.J. (1997) “The Trade Effects of U.S. Anti-dumping Actions”. in The Effects of U.S. Trade Protection and Promotion Policies, ed. Feenstra, R.C. (Chicago and London: University of Chicago Press.)Google Scholar
[16] Prusa, T. J. (1992) “Why are So Many Antidumping Petitions Withdrawn?” Journal of International Economics 33 (1), 1–20.CrossRefGoogle Scholar
[17] Ries, J. C. (1993) “Windfall Profits and Vertical Relationships: Who Gained in the Japanese Auto Industry from VERs?” Journal of Industrial Economics 41 (3), 259–76.Google Scholar
[18] Staiger, R. W. and Wolak, F. A. (1994) “Measuring Industry Specific Protection: Antidumping in the United States,” Brookings Papers on Economic Activity: Microeconomics, 51–118.Google Scholar
[19] United States International Trade Commission. (2001). Antidumping and Countervailing Duty Handbook. (USITC Publication No. 3482)Google Scholar
[20] United States International Trade Commission. (2001) Determination and views of the commission. (USITC Publication No. 3394)Google Scholar
[21] United States International Trade Commission. (2000) Determinations and views of the commission-Certain Expandable Polystyree Resins from Indonesia and Korea (USITC Publication No. 3266)Google Scholar