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European antidumping policy and firmsÕ strategic choice of quality

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Author Info
VANDENBUSSCHE, Hylke
WAUTHY, Xavier

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Abstract

In this paper, we consider a European industry characterized by vertical product differentiation. Using a two-stage model with quality choice made before price competition takes place, we show that EU antidumping policy that takes the form of price-undertakings offers a powerful protection to domestic Þrms, but only at the price competition stage. Once the impact of the A-D policy on quality choices is taken into account, European Welfare as well as proÞts accruing to the domestic Þrm decrease whenever the free trade equilibrium is affected. Hence we show that European Antidumping policies may induce ÒperverseÓ leapfrogging

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Publisher Info
Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1999016.

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Date of creation: 01 Mar 1999
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Handle: RePEc:cor:louvco:1999016

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Related research
Keywords: Bertrand competition; injury; quality; Welfare; European antidumping policy;

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

References listed on IDEAS
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  1. Feenstra, R.C., 1995. "Estimating the Effects of Trade Policy," Papers 95-10, California Davis - Institute of Governmental Affairs.
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  2. Vandenbussche, Hylke & Veugelers, Reinhilde, 1996. "European Anti-dumping Policy and the Profitability of National and International Collusion," CEPR Discussion Papers 1469, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Blackwell Publishing, vol. 41(2), pages 113-31, June. [Downloadable!] (restricted)
  4. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August. [Downloadable!] (restricted)
  5. Wauthy, Xavier, 1996. "Quality Choice in Models of Vertical Differentiation," Journal of Industrial Economics, Blackwell Publishing, vol. 44(3), pages 345-53, September. [Downloadable!] (restricted)
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