Essays on the political economics of trade policies

This dissertation consists of three essays on the political economics of trade policies. The first essay analyses the strategic effects of antidumping law and its effects on domestic and foreign industries. A dynamic game-theoretic model identifies the rationale for firms to file antidumping petitions as a function of the market structure of the industry and the growth or contraction in demand prior to filing. The model incorporates the legal standards for a successful petition, uncertainty about domestic demand, short-run responses of foreign and domestic firms, and the choice of capacity by the domestic industry. The analysis identifies a negative relation between the dumping duty and demand growth. Petitions that satisfy the legal standards of a successful antidumping case are filed for intermediate and high levels of demand in contrast to the conventional wisdom.; The second essay presents an empirical investigation of the filing and outcomes of antidumping petitions. It jointly estimates the decision to file and the probability of success of petitions as a bivariate probit model with sample selection. The sample used to estimate the outcome of the petitions is censored, since only those industries that file petitions can receive protection. A joint estimation of the two equations accounts for the potential correlation between filing and the outcome of antidumping petitions; that is, the filing decision is based on expectations about the outcomes.; This model tests hypotheses derived from the model in Chapter 2. It identifies industries filing successful petitions in 'good times' according to demand, capacity utilization, concentration and the import-penetration ratio. It examines the relation between the dumping margin and demand in the petitioning industry prior to filing, and the relation between the dumping margin and the outcome of the petitions. Finally, it tests the hypothesis that political factors affect the outcome of the petitions, which is counter to the maintained hypotheses of Chapter 2.; The third essay examines the GATT and WTO dispute settlement process and how it evolved from an informal process to a complicated and detailed set of rules administered by a third-party. The essay studies the effectiveness of the DSB in resolving trade disputes under the new WTO rules, and the role this new institution is likely to play in promoting cooperation among disputing nations given the constraints it faces as an international institution with no enforcement powers. The question is how can the DSB accomplish this given the problems of commitment and reciprocity. A third-party institution with stricter time limits to resolve disputes and means to legitimize retaliation may prove to be effective in resolving disputes and promoting cooperation if the disputants are of equal economic power and/or the issue is not salient enough to provoke powerful interest groups. It is also a means to bring trading partners to the negotiating table in case the threat of Section 301 is ineffective. (Abstract shortened by UMI.)...