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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%.

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 443.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:443

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Keywords: trade policy; dumping; antidumping;

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  1. Prusa, Thomas J., 1992. "Why are so many antidumping petitions withdrawn?," Journal of International Economics, Elsevier, vol. 33(1-2), pages 1-20, August.
  2. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
  3. Knetter, Michael M. & Prusa, Thomas J., 2003. "Macroeconomic factors and antidumping filings: evidence from four countries," Journal of International Economics, Elsevier, vol. 61(1), pages 1-17, October.
  4. Bruce A. Blonigen & Thomas J. Prusa, 2001. "Antidumping," NBER Working Papers 8398, National Bureau of Economic Research, Inc.
  5. Hansen, Wendy L & Prusa, Thomas J, 1996. "Cumulation and ITC Decision-Making: The Sum of the Parts Is Greater Than the Whole," Economic Inquiry, Western Economic Association International, vol. 34(4), pages 746-69, October.
  6. Robert E. Baldwin & Jeffrey W. Steagall, 1993. "An Analysis of Factors Influencing ITC Decisions in Antidumoing, Countervailing Duty and Safeguard Cases," NBER Working Papers 4282, National Bureau of Economic Research, Inc.
  7. 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.
  8. Robert Staiger & Frank Wolak, 1994. "Measuring Industry Specific Protection: Antidumping in the United States," International Trade 9410004, EconWPA.
  9. Moore, Michael O, 1992. "Rules or Politics? An Empirical Analysis of ITC Anti-dumping Decisions," Economic Inquiry, Western Economic Association International, vol. 30(3), pages 449-66, July.
  10. Robert W. Staiger & Frank A. Wolak, 1990. "The Effect of Domestic Antidumping Law in the Presence of Foreign Monopoly," NBER Working Papers 3254, National Bureau of Economic Research, Inc.
  11. Bruce A. Blonigen & Jee-Hyeong Park, 2001. "Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence," NBER Working Papers 8477, National Bureau of Economic Research, Inc.
  12. Gruenspecht, Howard K., 1988. "Dumping and dynamic competition," Journal of International Economics, Elsevier, vol. 25(3-4), pages 225-248, November.
  13. Van de Ven, Wynand P. M. M. & Van Praag, Bernard M. S., 1981. "The demand for deductibles in private health insurance : A probit model with sample selection," Journal of Econometrics, Elsevier, vol. 17(2), pages 229-252, November.
  14. Hansen, Wendy L & Prusa, Thomas J, 1997. "The Economics and Politics of Trade Policy: An Empirical Analysis of ITC Decision Making," Review of International Economics, Wiley Blackwell, vol. 5(2), pages 230-45, May.
  15. Dixit, Avinash, 1988. "Anti-dumping and countervailing duties under oligopoly," European Economic Review, Elsevier, vol. 32(1), pages 55-68, January.
  16. Robert Baldwin & Jeffrey Steagall, 1994. "An analysis of ITC decisions in antidumping, countervailing duty and safeguard cases," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(2), pages 290-308, June.
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