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WTO's Anti-dumping Rule and the Protection of Incumbents

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  • Uwe Dulleck

Abstract

Article VI of the GATT allows counter measures if goods are sold in a foreign market at a price below average production plus transportation costs. The present article analyses Article VI based on a simple game theoretic model with two countries and economies of scale in the production of one homogeneous good. It is shown that multiple equilibria exist under the WTO rule for some parameter values that do not exist without the rule. In some equilibria, the incumbent serves the entire market even if the entrant can produce at lower costs. The model supports the criticism of the anti-dumping rule as an instrument of protection by industrialized countries against competition from developing countries.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.

Volume (Year): 14 (2005)
Issue (Month): 2 ()
Pages: 229-239

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Handle: RePEc:taf:jitecd:v:14:y:2005:i:2:p:229-239

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Keywords: GATT Article VI; anti-dumping; economies of scale; multiple Nash-equilibria;

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  1. Kyle Bagwell & Robert W. Staiger, 1996. "Strategic Export Subsidies and Reciprocal Trade Agreements: The Natural Monopoly Case," NBER Working Papers 5574, National Bureau of Economic Research, Inc.
  2. James A. Brander & Barbara J. Spencer, 1984. "Export Subsidies and International Market Share Rivalry," NBER Working Papers 1464, National Bureau of Economic Research, Inc.
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