TY  - JOUR
AU  - Blonigen,Bruce A.
AU  - Wilson,Wesley W.
TI  - Foreign Subsidization and Excess Capacity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11798
PY  - 2005
Y2  - November 2005
UR  - http://www.nber.org/papers/w11798
L1  - http://www.nber.org/papers/w11798.pdf
N1  - Author contact info:
Bruce Blonigen
Department of Economics
1285 University of Oregon
Eugene, OR 97403-1285
Tel: 541/346-4680
Fax: 541/346-1243
E-Mail: bruceb@uoregon.edu

Wesley Wilson
Department of Economics
1285 University of Oregon
Eugene, OR 97403-1285
E-Mail: wwilson@uoregon.edu
AB  - The U.S. steel industry has long held that foreign subsidization and 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 illustrate testable implications of both cyclical excess capacity and structural excess capacity stemming from foreign subsidization. We then use detailed product- and foreign country-level data on steel exports to the U.S. market from 1979 through 2002 to estimate these excess capacity effects. The results provide strong evidence of both cyclical and structural excess capacity effects for exports to the U.S. market. However, the effects are confined to such a narrow range of country-product combinations that it is unlikely that such effects were a significant factor in the fortunes of U.S. steel firms over the past decades.
ER  -