Case Write-up: Standing up for Steel
Instructions:
Read the case "Standing up for Steel" in the case packet and briefly respond to the case question(s) below. You are welcome to discuss the case as a group, but each person must write their own response. Responses that are identical will not receive credit.
Based on your reading of the case, respond to the following question(s):
(a) In problem set 6, you demonstrated (hopefully) that allowing international sales in the U.S. increases consumer welfare by more than producer welfare falls. Thus, steel tariffs on international imports are welfare reducing. Yet the steel industry is successful in lobbying for steel tariffs.
Referencing the class on political economy, what explains why the government enacts a welfarereducing policy?
(b) Big steel firms were initially against the steel tariffs, despite the fact that they would seem to benefit from higher domestic steel prices. Later, they change their stance to favor steel tariffs. later favored steel tariffs. What might explain why they weren't in favor of steel tariffs throughout the period?
Case Program: Standing up for Steel: The US Government Response to Steel Industry And Union Efforts to Win Protection from Imports (1998-2003).