Volume Title: Empirical Studies of Strategic Trade Policy. Volume Author/Editor: Paul Krugman and Alasdair Smith, editors

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This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Empirical Studies of Strategic Trade Policy Volume Author/Editor: Paul Krugman and Alasdair Smith, editors Volume Publisher: University of Chicago Press Volume ISBN: 0-226-45460-6 Volume URL: http://www.nber.org/books/krug94-1 Conference Date: October 13-14, 1989 Publication Date: January 1994 Chapter Title: Front matter, Empirical Studies of Strategic Trade Policy Chapter Author: Paul R. Krugman, Alasdair Smith Chapter URL: http://www.nber.org/chapters/c8672 Chapter pages in book: (p. -14-0)

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Empirical Studies of Strategic Trade Policy

A National Bureau of Economic Research Project Report

Empirical Studies of Strategic Trade Policy Editedby Paul Krugman and Alasdair Smith The University of Chicago Press Chicago and London

PAUL KRUGMAN is a professor of economics at the Massachusetts Institute of Technology and a research associate of the National Bureau of Economic Research. ALASDAIR SMITH is professor of economics and dean of the School of European Studies at the University of Sussex and a research fellow in the international trade research program at the Centre for Economic Policy Research. The University of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London 0 1994 by the National Bureau of Economic Research All rights reserved. Published 1994 Printed in the United States of America 0302010099989796 2345 ISBN 0-226-45460-6 (cloth) Library of Congress Cataloging-in-Publication Data Empirical studies of strategic trade policy I edited by Paul Krugman and Alasdair Smith. p. report) cm.-(a National Bureau of Economic Research project Includes bibliographical references and indexes. 1. Commercial policy-case studies. 2. Industry and state-case studies. 3. International trade-case studies. I. Krugman, Paul R. 11. Smith, Alasdair. III. Series. HF1411.E47 1994 382.3-d~20 93-38665 CIP 8 The paper used in this publication meets the minimum requirements of the American National Standard for Information Sciences-Permanence of Paper for Printed Library Materials, ANSI 239.48-1984.

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Centre for Economic Policy Research The Centre for Economic Policy Research is a network of over 170 research fellows, based primarily in European universities. The centre coordinates its fellows research activities and communicates their results to the public and private sectors. CEPR is an entrepreneur, developing research initiatives with the producers, consumers, and sponsors of research. Established in 1983, CEPR is now a European-wide economics research organization with uniquely wide-ranging scope and activities. CEPR is a registered educational charity. Grants from the Leverhulme Trust, the Esm6e Fairbairn Charitable Trust, the Baring Foundation, the Bank of England, and Citibank provide institutional finance. The ESRC supports the centre s dissemination program and, with the Nuffield Foundation, its program of research workshops. None of these organizations gives prior review to the centre s publications nor necessarily endorses the views expressed therein. The centre is pluralist and nonpartisan, bringing economic research to bear on the analysis of medium- and long-run policy questions. CEPR research may include views on policy, but the executive committee of the centre does not give prior review to its publications and the centre takes no institutional policy positions. The opinions expressed in this book are those of the authors and not those of the Centre for Economic Policy Research. Executive Committee Chairman Vice-Chairmen Giorgio Basevi Honor Chapman Sheila Drew Smith Jacob A Frenkel Sarah Hogg Officers Director Deputy Director Director of Finance and Research Administration Anthony Loehnis Guillermo de la Dehesa Adam Ridley Otmar Issing Mervyn King Peter Middleton Mario Sarcinelli Alasdair Smith Richard Portes Stephen Ye0 Wendy Thompson

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Contents 1. 2. 3. 4. 5. Preface Introduction Paul Krugman The Nonoptimality of Optimal Trade Policies: The U.S. Automobile Industry Revisited, 1979-1985 11 Kala Krishna, Kathleen Hogan, and Phillip Swage1 Comment: Garth Saloner Trade Policy under Imperfect Competition: A Numerical Assessment 41 Anthony J. Venables Comment: David G. Tan Strategic Trade Policy in the European Car Market 67 Alasdair Smith Comment: James Levinsohn Deregulation of Scandinavian Airlines: A Case Study of the Oslo-Stockholm Route 85 Victor D. Norman and Siri P. Strandenes Industrial Policy in the Transport Aircraft Industry Gernot Klepper Comment: Heather A. Hazard xi 1 101 ix

x Contents 6. Trade and Industrial Policy for a Declining Industry: The Case of the US. Steel Industry Richard G. Harris 7. Strategic Manpower Policy and International Trade David Ulph and L. Alan Winters 8. 9. Industrial Organization and Product Quality: Evidence from South Korean and Taiwanese Exports Dani Rodrik Import Surveillance as a Strategic Trade Policy L. Alan Winters Comment: James E. Anderson Contributors Author Index Subject Index 131 157 195 211 235 237 241

Preface This volume includes nine papers that were prepared as part of a research program on Empirical Studies of Strategic Trade Policy by the Centre for Economic Policy Research and the National Bureau of Economic Research. The papers were prepared for a conference held at the National Bureau of Economic Research in Cambridge, Massachusetts, in the fall of 1989 (with the exception of one paper, which was presented at a Centre for Economic Policy Research workshop in the summer of 1988). We wish to thank the Ford Foundation for financial support of both the NBER and CEPR sides of the program. This volume contributes to continuing research on the practical significance of new approaches to the analysis of international trade. Paul Krugman and Alasdair Smith xi

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