Mismanaged Trade?: Strategic Policy and the Semiconductor Industry (Google eBook)

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Brookings Institution Press - Business & Economics - 472 pages
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The semiconductor industry is at the forefront of current tensions over international trade and investment in high technology industries. This book traces the struggle between U.S. and Japanese semiconductor producers from its origins in the 1950s to the novel experiment with " managed trade" embodied in the U.S.- Japan Semiconductor Trade Arrangements of 1986, and the current debate over continuation of elements of that agreement. Flamm provides a thorough analysis of this experiment and its consequences for U.S. semiconductor producers and users, and presents extensive discussion of patterns of competition within the semiconductor industry. Using a wealth of new data, he argues that a fundamentally new trade regime for high technology industries is needed to escape from the present impasse. He lays out the alternatives, from laissez-faire to managed trade, and argues strongly for a new set of international ground rules to regulate acceptable behavior by government and firms in high-tech industries. Flamm's detailed analysis of competition within the semiconductor industry will be of great value to those interested in the industrial organization of high-technology industries, as well as those concerned with trade and technology policy, international competition, and Japanese industrial policies.
  

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Contents

Introduction Challenges for Public Policy
1
Technology and Industrial Structure in Semiconductors
7
International Competition in Semiconductors
18
Strategic Policy in the United States
27
Table 16 US Industrial Consumption of Semiconductors by Consuming Sector Selected Years 196387
35
New Competition The Japanese Ascent in Semiconductors
39
First Steps
40
Early Exports in Electronics
49
The Second Semiconductor Trade Arrangement
223
Effects of the Semiconductor Trade Arrangement on Semiconductor Markets
227
Impacts on Semiconductor Supply and Demand
231
Impacts of Regional Price Differentials on Regional Welfare
272
DRAMs versus EPROMs
278
Import Promotion and the STA
279
Conclusions
292
The Economics of Contract Pricing
294

The Seal of Approval
52
Protecting the Japanese Market
55
The Integrated Circuit Arrives in Japan
59
A Secret Truce in the Patent War
68
Battles in the LSI Market
70
First Steps toward Liberalization and Dumping
73
The Calculator War
75
Further Liberalization and Crisis
77
Into the Japanese Market
88
NTT Arrives on the VLSI Scene
90
The VLSI Project
94
The Continuing Role of Government
113
Dependence in Silicon
119
Summary
124
The Genesis of an American Trade Policy in Semiconductors 195984
127
A Threat to National Security 1959
128
Television Exports in the 1960s
132
Competition in the 1970s
136
Below Cost Dumping
141
Quality Dumping
144
Organizing a Response
147
Competition Collusion or Predation? The 64K DRAM Wars
148
Sectoral Negotiations
153
The Semiconductor Trade Arrangement and Its Aftermath A Thumbnail Historical Sketch
159
Evolution of the Semiconductor Trade Regime
162
Initial Implementation of the Arrangement August 1986 to November 1987
175
The Privatization of Restraints December 1987 to Mid1989
201
Coordination Structures and High Price Stability 1989 to 1990
212
US Memories to the Rescue
216
Construction of Estimated FMVs
301
Dumping in DRAMs
305
The Economic Rationality of BelowMarginalCost Pricing
307
Cost Structures and Dumping in the Semiconductor Industry
311
Modeling the Semiconductor Product Life Cycle
313
Model Solution
334
Conclusions
358
A General Solution to the Problem of Optimal Capacity and Production Choice
359
Detailed Solution with Specific Demand and Learning Curve Assumptions
365
Strategic Issues Conceptions of Strategic
372
Semiconductor Dependency and Strategic Trade Policy
382
Anecdotal Evidence on Private Collusion
396
Empirical Tests for Competition
398
The Costs of Facing a Cartel
405
More Complex Stories about Cartels
415
Conclusion
417
Solution of the Model with Strategic Behavior
418
Conclusion Mismanaged Trade?
425
Why Semiconductors?
427
Strategic Policy in Semiconductors
429
Effects of the Semiconductor Trade Arrangement
433
Where Do We Stand?
437
Pricing and Dumping
442
Where Do We Go from Here?
449
The Global Semiconductor Conference
454
From Here to There
455
Mismanaged Trade?
457
Index
461
Copyright

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About the author

Kenneth Flamm is an economist and senior fellow in the Foreign Policy Studies program at the Brookings Institution.

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