Self-Protection: Antidumping Duties, Collusion and FDI
AbstractIt is well established that the threat of antidumping duties can help sustain collusion between a foreign firm and its domestic counterpart. However, when the foreign firm is a multinational, its subsidiary will fight against a new duty, potentially making this threat hollow and collusion less likely. We show that the multinational may therefore choose to submit to a tariff even under collusion since evidence indicates that duties are more difficult to remove than initiate. In this way, it is possible to obtain a greater degree of commitment, although it comes at a cost. Nevertheless, we show that this can be a more profitable strategy than those previously explored. In fact, we find several cases where subsidiaries of multinational firms have indeed filed for protection from their own parents.
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Bibliographic InfoPaper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2003-36.
Date of creation: 01 Jul 2003
Date of revision: 01 Nov 2003
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Antidumping; Collusion; Foreign Direct Investment;
Other versions of this item:
- Ronald B. Davies & Benjamin H. Liebman, 2006. "Self-protection? Antidumping Duties, Collusion, and FDI," Review of International Economics, Wiley Blackwell, vol. 14(5), pages 741-757, November.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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