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Do Anti-Dumping Rules Facilitate the Abuse of Market Dominance?

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Author Info
Martin Theuringer ()
Pia Weiß ()

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Abstract

We 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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Publisher Info
Paper provided by Institute for Economic Policy, Cologne, Germany in its series IWP Discussion Paper Series with number 03/2001.

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Date of creation: Mar 2001
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Handle: RePEc:kln:iwpdip:dp03/01

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Related research
Keywords: Anti-dumping; abuse of market dominance; strategic firm behaviour;

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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  1. Robert W. Staiger & Frank A. Wolak, 1989. "Strategic Use of Antidumping Law to Enforce Tacit International Collusion," NBER Working Papers 3016, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Dixit, Avinash K & Kyle, Albert S, 1985. "The Use of Protection and Subsidies for Entry Promotion and Deterrence," American Economic Review, American Economic Association, vol. 75(1), pages 139-52, March. [Downloadable!] (restricted)
  3. Prusa, Thomas J., 1992. "Why are so many antidumping petitions withdrawn?," Journal of International Economics, Elsevier, vol. 33(1-2), pages 1-20, August. [Downloadable!] (restricted)
  4. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March. [Downloadable!] (restricted)
    Other versions:
  5. Finger, J. Michael & Schuknecht, Ludger, 1999. "Market access advances and retreats : the Uruguay Round and beyond," Policy Research Working Paper Series 2232, The World Bank. [Downloadable!]
  6. James A. Brander & Barbara J. Spencer, 1981. "Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry," Canadian Journal of Economics, Canadian Economics Association, vol. 14(3), pages 371-89, August. [Downloadable!] (restricted)
    Other versions:
  7. Michael O. Moore, 2005. "VERs and Price Undertakings under the WTO," Review of International Economics, Blackwell Publishing, vol. 13(2), pages 298-310, 05. [Downloadable!] (restricted)
  8. 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. [Downloadable!] (restricted)
  9. Fischer, Ronald D., 1992. "Endogenous probability of protection and firm behavior," Journal of International Economics, Elsevier, vol. 32(1-2), pages 149-163, February. [Downloadable!] (restricted)
  10. Campbell, Neil, 2000. "Import Quotas and Entry Deterrence," Australian Economic Papers, Blackwell Publishing, vol. 39(2), pages 152-58, June. [Downloadable!] (restricted)
  11. Wilfried Pauwels, Hylke Vandenbussche, Marcel Weverbergh, 2001. "Strategic Behaviour under European Antidumping Duties," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 8(1), pages 75-99, February. [Downloadable!] (restricted)
  12. Moore, Michael O., 2005. ""Facts available" dumping allegations: when will foreign firms cooperate in antidumping petitions?," European Journal of Political Economy, Elsevier, vol. 21(1), pages 185-204, March. [Downloadable!] (restricted)
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This page was last updated on 2009-11-25.

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