The impact of trade policy and imperfect competition on prices and productivity: Three empirical essays

The first chapter of this dissertation provides an empirical test of the relationship between market power and exchange rate pass-through, defined as the response of import prices to exchange rate changes. The motivation for this chapter stems from the sluggish response of import prices to fluctuations in the dollar during the 1980s, which many researchers suggested could be due to oligopoly behavior among domestic and foreign firms.; For this chapter, a dataset was constructed using price and quantity data for EEC and Japanese steel exporters to the US over 1976-1986. The theoretical model incorporates Cournot competition and allows for imported inputs in production, which could reverse the expected effects of exchange rate shocks.; The results indicate that for the six steel products examined, Japanese and EEC exporters to the US market acted competitively between 1976 and 1986. However, the historical relationship between import prices and exchange rates was altered by other factors, such as changes in the prices of imported inputs and shifts in trade policy.; The second chapter examines a new type of protection: the increasing use in the 1980s of dumping and countervailing measures in the United States. This chapter measures the portective effect of both investigations (which evaluate claims of dumping or subsidies) and the duties which follow by separately measuring the impact of investigations and duties on import prices. Using a panel dataset for 1981-86, this new dataset suggests that for some sectors, the investigation itself has a greater protective effect than duties.; The third chapter evaluates the impact of a 1985 trade reform in Cote d'Ivoire on the productivity and profit margins of manufacturing enterprises. Research on productivity has often focused on the relationship between productivity increases and structural changes in an economy, such as a trade policy reform. If, however, those structural changes affect the nature of competition, then both the levels and changes in productivity growth may be mismeasured. The results show that market power fell in a number of sectors following the trade reform. The results also suggest that ignoring the impact of reform on competition leads to biased estimates of the relationship between trade reform and productivity growth.