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Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence

  • Bruce A. Blonigen
  • Jee-Hyeong Park

Antidumping (AD) trade protection policies allow government agencies to recalculate AD duties based on foreign firms' most recent pricing behavior. We examine the resulting dynamic pricing problem of a foreign firm facing such policy. We show that the expected pattern of AD duty recalculations over time crucially depends on the foreign firm's ex ante expectations of possible outcomes of AD policy enforcement. Our empirical analysis then confirms the role of ex ante expectations in explaining observed patterns of AD recalculations. Many of our model's results are applicable to other situations where enforcement of policy is tied to the subject's behavior.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/000282804322970742
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 94 (2004)
Issue (Month): 1 (March)
Pages: 134-154

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Handle: RePEc:aea:aecrev:v:94:y:2004:i:1:p:134-154
Note: DOI: 10.1257/000282804322970742
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  16. Maurizio Zanardi, 2000. "Antidumping Law as a Collusive Device," Boston College Working Papers in Economics 487, Boston College Department of Economics.
  17. Moore, Michael O, 1992. "Rules or Politics? An Empirical Analysis of ITC Anti-dumping Decisions," Economic Inquiry, Western Economic Association International, vol. 30(3), pages 449-66, July.
  18. Gallaway, Michael P. & Blonigen, Bruce A. & Flynn, Joseph E., 1999. "Welfare costs of the U.S. antidumping and countervailing duty laws," Journal of International Economics, Elsevier, vol. 49(2), pages 211-244, December.
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