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Anti-Dumping with Heterogeneous Firms: New Protectionism for the New-New Trade Theory

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  • Gormsen, Christian

    ()
    (Department of Economics, Aarhus School of Business)

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    Abstract

    This paper analyzes anti-dumping (AD) policies in a two-country model with heterogeneous firms in monopolistic competition. Effective AD legislation in one country imposes a no-dumping condition on firms exporting from the other country, altering their pricing both domestically and abroad. Some firms with intermediate productivities cease export activity, and entry shifts towards the AD protected country, which has now become relatively more attractive. Protecting firms with AD therefore increases the number of firms entering and eventually increases competition, and the consumers enjoy welfare gains. In the country without AD legislation, there is a welfare loss due to fewer entrants.

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    File URL: http://research.asb.dk/fbspretrieve/3851/wp_08-24
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    Bibliographic Info

    Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 08-24.

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    Length: 32 pages
    Date of creation: 01 Nov 2008
    Date of revision:
    Handle: RePEc:hhs:aareco:2008_024

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    Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
    Phone: +45 89 486396
    Fax: +45 8615 5175
    Web page: http://www.asb.dk/departments/nat.aspx
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    Related research

    Keywords: Trade policy; Anti-dumping; Monopolistic competition; Heterogeneous firms;

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