Trade liberalization and industrial concentration: Evidence from Brazil

This paper studies the relationship between industrial structure and the extent of trade protection granted to Brazilian manufacturing industries during the 1988-1994 trade liberalization episode. Using a panel data-set covering this period, we find that even in an environment in which a major regime shift has been introduced, more concentrated sectors have been able to obtain policy advantages, that lead to a reduction in international competition. The importance of industry structure appears to be substantial: In our baseline specification, an increase in concentration by 20% leads to an increase in protection by 5-7%.