Citation

Discussion Paper Details

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Title: The US-Japan Semiconductor Agreement

Author(s): Richard Baldwin

Publication Date: March 1990

Keyword(s): Commercial Policy, Semiconductor Industry, Trade Agreements and Trade Restrictions

Programme Area(s): International Trade and Regional Economics

Abstract: The semiconductor arrangement was intended to enhance free trade based on market principles. This paper argues that the arrangement had exactly the opposite effect. The arrangement has two parts: a price floor to prevent predatory pricing, and provisions to double U.S. market share in Japan to counter market closure. Given semiconductor production technology, the price floor forced a capacity reduction, a rise in world prices and a cartelization of the market. Since the observed dumping was probably not predatory pricing, the price floor restricted competition and free trade. The market closure probably exists and significantly harms non-Japanese producers. It is therefore an anti-competitive practice.

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Bibliographic Reference

Baldwin, R. 1990. 'The US-Japan Semiconductor Agreement'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=387