Advanced Search
MyIDEAS: Login to save this article or follow this journal

Antidumping duties and price undertakings: A welfare analysis

Contents:

Author Info

  • Wu, Shih-Jye
  • Chang, Yang-Ming
  • Chen, Hung-Yi

Abstract

In this paper we examine differences in welfare implications between two trade protection measures: antidumping (AD) duties and price undertakings. Based on a stylized model of duopolistic competition under an effective AD law, we first analyze the case where a foreign firm convicted of dumping is required to pay an AD duty. We then examine the case in which a convicted foreign firm has the option of (i) paying an AD duty or (ii) accepting an undertaking by raising product price to its “normal value.” Taking into account the GATT/WTO policy that an AD duty rate must not exceed the margin of dumping, we show conditions under which a foreign firm chooses to evade its AD fine by a price undertaking. We find that the welfare-maximizing AD duty rate for a dumped product depends crucially on its normal value. If the foreign product's normal value is “critically high,” the optimal AD rate is set to fully reflect the dumping margin. Otherwise, the optimal AD rate is set lower than the dumping margin. From the perspective of social welfare, these findings help to identify the economic conditions under which one policy instrument is chosen over the other against foreign dumping.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S1059056013000488
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 29 (2014)
Issue (Month): C ()
Pages: 97-107

as in new window
Handle: RePEc:eee:reveco:v:29:y:2014:i:c:p:97-107

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/620165

Related research

Keywords: Antidumping duties; Dumping margin; Price undertakings;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Anderson, Simon P. & Schmitt, Nicolas & Thisse, Jacques-Francois, 1995. "Who benefits from antidumping legislation?," Journal of International Economics, Elsevier, vol. 38(3-4), pages 321-337, May.
  2. Zanardi, M., 2005. "Antidumping: A Problem in International Trade," Discussion Paper 2005-85, Tilburg University, Center for Economic Research.
  3. Reitzes, James D, 1993. "Antidumping Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(4), pages 745-63, November.
  4. Dixit, Avinash, 1988. "Anti-dumping and countervailing duties under oligopoly," European Economic Review, Elsevier, vol. 32(1), pages 55-68, January.
  5. Jota Ishikawa & Kaz Miyagiwa, 2007. "Price Undertakings, VERs, and Foreign Direct Investment: The Case of Foreign Rivalry," ISER Discussion Paper 0693, Institute of Social and Economic Research, Osaka University.
  6. COLLIE, David R. & VANDENBUSSCHE, Hylke, . "Tariffs and the Byrd amendment," CORE Discussion Papers RP -1890, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Anderson, James E, 1992. "Domino Dumping, I: Competitive Exporters," American Economic Review, American Economic Association, vol. 82(1), pages 65-83, March.
  8. Hillman, Arye L, 1990. " Protectionist Policies as the Regulation of International Industry," Public Choice, Springer, vol. 67(2), pages 101-10, November.
  9. James Brander & Paul Krugman, 1980. "A "Reciprocal Dumping" Model of International Trade," Working Papers 405, Queen's University, Department of Economics.
  10. VANDENBUSSCHE, Hylke & WAUTHY, Xavier, . "Inflicting injury through product quality: how European antidumping policy disadvantages European producers," CORE Discussion Papers RP -1508, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Prusa, Thomas J., 1992. "Why are so many antidumping petitions withdrawn?," Journal of International Economics, Elsevier, vol. 33(1-2), pages 1-20, August.
  12. Dinlersoz, Emin & Dogan, Can, 2010. "Tariffs versus anti-dumping duties," International Review of Economics & Finance, Elsevier, vol. 19(3), pages 436-451, June.
  13. Leonard K. Cheng & Larry D. Qiu & Kit Pong Wong, 2001. "Anti-dumping measures as a tool of protectionism: A mechanism design approach," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 639-660, August.
  14. Miyagiwa, Kaz & Ohno, Yuka, 2007. "Dumping as a signal of innovation," Journal of International Economics, Elsevier, vol. 71(1), pages 221-240, March.
  15. Hillman, Arye L & Ursprung, Heinrich W, 1988. "Domestic Politics, Foreign Interests, and International Trade Policy," American Economic Review, American Economic Association, vol. 78(4), pages 719-45, September.
  16. Shih-Jye Wu & Yang-Ming Chang & Hung-Yi Chen, 2011. "Antidumping Petition: To File or Not To File," Economics Bulletin, AccessEcon, vol. 31(1), pages 631-643.
  17. Nelson, Douglas, 2006. "The political economy of antidumping: A survey," European Journal of Political Economy, Elsevier, vol. 22(3), pages 554-590, September.
  18. Yang-Ming Chang & Philip G. Gayle, 2006. "The Continued Dumping and Subsidy Offset Act: An Economic Analysis," Southern Economic Journal, Southern Economic Association, vol. 73(2), pages 530–545, October.
  19. Laura ROVEGNO & Hylke VANDENBUSSCHE, 2011. "A comparative analysis of EU Antidumping rules and application," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2011023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  20. James E. Anderson, 1993. "Domino Dumping, II: Anti-dumping," Boston College Working Papers in Economics 219, Boston College Department of Economics.
  21. Belderbos, R. & Vandenbussche, H. & Veugelers, R., 2004. "Antidumping duties, undertakings, and foreign direct investment in the EU," European Economic Review, Elsevier, vol. 48(2), pages 429-453, April.
  22. Evenett, Simon J., 2006. "The simple analytics of U.S. antidumping orders: Bureaucratic discretion, anti-importer bias, and the Byrd amendment," European Journal of Political Economy, Elsevier, vol. 22(3), pages 732-749, September.
  23. Bruce A. Blonigen & Chad P. Bown, 2001. "Antidumping and Retaliation Threats," NBER Working Papers 8576, National Bureau of Economic Research, Inc.
  24. Douglas Irwin, 2004. "The Rise of U.S. Antidumping Actions in Historical Perspective," NBER Working Papers 10582, National Bureau of Economic Research, Inc.
  25. Michael O. Moore, 2005. "VERs and Price Undertakings under the WTO," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 298-310, 05.
  26. Finger, J M & Hall, H Keith & Nelson, Douglas R, 1982. "The Political Economy of Administered Protection," American Economic Review, American Economic Association, vol. 72(3), pages 452-66, June.
  27. Xiwang Gao & Kaz Miyagiwa, 2005. "Antidumping protection and R&D competition," Canadian Journal of Economics, Canadian Economics Association, vol. 38(1), pages 211-227, February.
  28. Niels, Gunnar, 2000. " What Is Antidumping Policy Really About?," Journal of Economic Surveys, Wiley Blackwell, vol. 14(4), pages 467-92, September.
  29. Fischer, Ronald D., 1992. "Endogenous probability of protection and firm behavior," Journal of International Economics, Elsevier, vol. 32(1-2), pages 149-163, February.
  30. Wilfried Pauwels & Hylke Vandenbussche & Marcel Weverbergh, 2001. "Strategic Behaviour under European Antidumping Duties," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(1), pages 75-99.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:29:y:2014:i:c:p:97-107. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.