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WTO´s Anti-dumping Rule and the Protection of Incumbents

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Uwe Dulleck ()

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Abstract

Article VI of the GATT allows counter measures of goods are sold on a foreign market at a price below average production plus transportation costs. The present article analyzes Article VI based on a simple game theoretic model with two countries and economies of scale in the production of one homogeneous good. It is shown that multiple equilibria exist under the WTO rule for some parameter values which do not exist without the rule. In some equilibria the incumbent serves the entire market even if the entrant can porduce at lower costs. The model supports the criticism of the anti-dumping rule as an instrument of protection by industrialized countries against competition from developing countries.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie0407.pdf
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0407.

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Date of creation: Mar 2004
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Handle: RePEc:vie:viennp:0407

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Web page: http://www.univie.ac.at/vwl

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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  1. Bagwell, Kyle & Staiger, Robert W., 1997. "Strategic export subsidies and reciprocal trade agreements: The natural monopoly case," Japan and the World Economy, Elsevier, vol. 9(4), pages 491-510, December. [Downloadable!] (restricted)
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  2. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February. [Downloadable!] (restricted)
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This page was last updated on 2009-11-25.

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