Abstract:
In September 1982, Harley-Davidson, the only remaining US-based motorcycle manufacturer, petitioned the International Trade Commission for temporary relief, in the form of steep tariffs, from high levels of Japanese heavyweight motorcycles and motorcycle components. Harley claimed that Japanese manufacturers had exported a great many more heavyweight motorcycles to the US than market demand warranted, and as a result were selling models at prices so low that Harley could not compete. Japanese cycle manufacturers countered that their products were not competitive with Harley cycles, which appealed to a different market segment, and that Harley's financial troubles stemmed from the 1981-82 economic downturn rather than foreign competition.
Learning Objective:
This case documents the opposing claims of Harley and the Japanese manufacturers regarding (A) injury and (B) import relief. It is designed to provide a straightforward review of consumer and producer surplus, including concepts of deadweight loss, quasi-rents, and cross-elasticities. The case can also be used to examine the importance of market definition in a trade case, the tradeoffs between tariffs and quotas, and the implications of bankruptcy for jobs and capital.
