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Split Decisions in Antidumping Cases

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Author Info

  • Crowley Meredith A.

    ()
    (Federal Reserve Bank of Chicago)

Abstract

This paper provides a rationale for “split decisions” in antidumping cases. A split decision occurs when the U.S. government simultaneously investigates multiple countries for dumping the same product but imposes antidumping duties on only a subset of these countries. In the U.S., 76% of antidumping petitions filed between 1980 and 2004 involved two or more countries accused of dumping the same product. Among these multi-country investigations, roughly 30% concluded with a split decision in the final stage of an investigation. The model in this paper shows that selectively applying antidumping duties against foreign countries that are selling increased quantities of imports at a price below long run average total cost improves the importing country's welfare. Imperfectly competitive firms in different countries face stochastic demand and are subject to capacity constraints. As a result, foreign firms dump when they face weak demand in their own markets. In response to the shift in a foreign country's export supply, the importing country's optimal rent-shifting tariff against the foreign country with weak demand increases while its optimal tariff against other countries falls. This paper suggests an economic rationale behind the differential treatment afforded to different countries accused of dumping.

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File URL: http://www.degruyter.com/view/j/bejeap.2010.10.1/bejeap.2010.10.1.1963/bejeap.2010.10.1.1963.xml?format=INT
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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 10 (2010)
Issue (Month): 1 (July)
Pages: 1-26

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Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:68

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Web page: http://www.degruyter.com

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Cited by:
  1. Chad Bown & Meredith Crowley, 2013. "Emerging economies, trade policy, and macroeconomic shock," Working Paper Series WP-2012-18, Federal Reserve Bank of Chicago.
  2. Meredith Crowley, 2007. "Cyclical dumping and U.S. antidumping protection: 1980-2001," Working Paper Series WP-07-21, Federal Reserve Bank of Chicago.
  3. Bown, Chad P. & Crowley, Meredith A., 2012. "Import protection, business cycles, and exchange rates : evidence from the great recession," Policy Research Working Paper Series 6038, The World Bank.

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