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Antidumping Policy Under Imperfect Competition: Theory and Evidence

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  • Meredith A. Crowley

Abstract

In this paper, I develop and test a model of dumping among imperfectly competitive firms in different countries that face stochastic demand. In the theoretical model, I show that foreign firms dump when they face weak demand in their own markets. I then show that an antidumping duty can improve an importing country's welfare by shifting some of the dumping firm's rents to the home country. I test this model using data on US antidumping cases from 1979 to 1996. Empirically, I find strong evidence that the US government is more likely to impose protection when demand in foreign countries is weak. After controlling for injury to the domestic industry and the strength of US aggregate demand, I find that reducing foreign aggregate demand two standard deviations below its trend increases the probability of protection by 2.8-3.4%.

Suggested Citation

  • Meredith A. Crowley, 2004. "Antidumping Policy Under Imperfect Competition: Theory and Evidence," Econometric Society 2004 North American Summer Meetings 443, Econometric Society.
    • Handle: RePEc:ecm:nasm04:443
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    References listed on IDEAS

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    Cited by:

    1. Blonigen, Bruce A. & Wilson, Wesley W., 2010. "Foreign subsidization and excess capacity," Journal of International Economics, Elsevier, vol. 80(2), pages 200-211, March.

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    More about this item

    Keywords

    trade policy; dumping; antidumping;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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