Do Anti-Dumping Rules Facilitate the Abuse of Market Dominance?
AbstractWe discuss the effects of AD-protection in a standard Dixit model of entry deterrence. In an AD-regime, the newcomer is constrained by a minimum-price rule in addition to existing irreversible entrance costs. For minimum prices which lie below the Stackelberg one, we find that AD-rules distort competition. We show that AD-protection increases the advantages of entry deterrence for a wide range of combinations of sunk costs and minimum prices. When entrance costs are high, consumer welfare is lower in an AD-regime than under free trade. Consequently, AD-protection facilitates the abuse of market dominance.
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Bibliographic InfoPaper provided by Institute for Economic Policy, Cologne, Germany in its series IWP Discussion Paper Series with number 03/2001.
Date of creation: Mar 2001
Date of revision:
Anti-dumping; abuse of market dominance; strategic firm behaviour;
Other versions of this item:
- Martin Theuringer & Pia Weiss, 2001. "Do Anti-Dumping Rules Facilitate the Abuse of Market Dominance?," International Trade 0108002, EconWPA.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
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