The Anatomy of Trade Deflection
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Veysel Avsar
Abstract
This study employs four-dimensional (firm-product-destination-year) export data of Brazilian firms to analyze firm-level responses when faced with an antidumping protection in a particular export market. We examine the extent to which firms shift their exports to other destinations in response to the antidumping duties. Our findings suggest that trade deflection depends on past export status in export markets. Firms deflect trade but only to destinations where they already have an established trading relationship. This prior relationship is important both for the intensive as well as for the extensive margin of trade alternative destinations. In addition to making sense of existing puzzles in trade deflection, this paper makes an important contribution by demonstrating how much the fixed costs of developing an export destination matter in terms of trade deflection.
Acknowledgements
I am indebted to Marc Muendler for sharing his data preparation codes, providing computational support and answering all of my related questions. I want to thank Lisandra Flach for helping me with the data and for many other useful suggestions. For helpful discussions, I would like to thank Jesse Bull, Richard Chisik, Sheng Guo, Cem Karayalcin, Sui Sui, Peter Thompson and Mehmet Ulubasoglu.
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Articles in the same Issue
- Analyzing Trade Growth Effects of Deviations from Long-run Economic Growth
- The Asymmetric Effects of Exchange Rate Changes on the Trade Balance of Singapore
- Economic Freedom and the Informal Economy
- Sustainability of Current Account Deficits in the OECD Countries: Evidence from Panel Data Estimators
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- An Empirical Analysis of Aggregate Import Demand Function for India
- Russia and the Use of Trade Policy: Concentration with Soviet Successor States
- The Comparative Advantages in the Services Sector of Developing Economies
