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Alternative Effects of Antidumping Policy: Should Mexican Authorities be Worried?

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  • Alfonso Mendieta

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    (School of Economic and Social Studies, University of East Anglia)

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    Abstract

    Administered protection is not the only outcome of antidumping measures. This paper suggests a basic model of repeated interaction between a domestic and a foreign firm. Competing in prices in the importing market, antidumping action serves as the means to enforce and sustain tacit collusion between the firms. The main result is that price distortions by antidumping policy are a departure point for the achievement of the collusive outcome. Discount factors of future profits are altered relative to those observed under free trade, delaying domestic firm’s propensity to collude and prompting foreign firm’s.

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    File URL: http://www.economiamexicana.cide.edu/num_anteriores/XIV-1/02_ALternative_effects.pdf
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    Bibliographic Info

    Article provided by in its journal Economia Mexicana NUEVA EPOCA.

    Volume (Year): XIV (2005)
    Issue (Month): 1 (January-June)
    Pages: 41-69

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    Handle: RePEc:emc:ecomex:v:14:y:2005:i:1:p:41-69

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    Related research

    Keywords: price competition; repeated interaction; tacit collusion; antidumping;

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    17. Margaret Levenstein & Valerie Suslow & Lynda Oswald, 2003. "International Price-Fixing Cartels and Developing Countries: A Discussion of Effects and Policy Remedies," William Davidson Institute Working Papers Series 538, William Davidson Institute at the University of Michigan.
    18. Margaret Levenstein & Valerie Suslow & Lynda Oswald, 2003. "International Price-Fixing Cartels and Developing Countries: A Discussion of Effects and Policy Remedies," NBER Working Papers 9511, National Bureau of Economic Research, Inc.
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    20. Feinberg, Robert M, 1989. "Exchange Rates and "Unfair Trade."," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 704-07, November.
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