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Trade diversion and antidumping effectiveness: insights from a residual demand model

Author

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  • Kinnucan, Henry W.
  • Minh, Nguyen Duc
  • Zhang, Dengjun

Abstract

A residual demand model is developed to predict the likely effects of an antidumping duty in the presence of trade diversion. A key insight is that the ability of an AD duty to increase the welfare of producers in the country imposing the duty hinges on the import supply elasticity for product from non-named sources. The only instance in which this is not true is when supply for product from the named source is perfectly elastic. In this case, the welfare gain to domestic producers is maximised irrespective of the supply elasticity for imports from non-named sources. A comparison of the residual demand model with the Armington model suggests the latter significantly understates both trade diversion and domestic producer gains from the duty.

Suggested Citation

  • Kinnucan, Henry W. & Minh, Nguyen Duc & Zhang, Dengjun, 2017. "Trade diversion and antidumping effectiveness: insights from a residual demand model," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(2), April.
    • Handle: RePEc:ags:aareaj:302931
    DOI: 10.22004/ag.econ.302931
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    Cited by:

    1. Nguyen, Ly & Kinnucan, Henry W., 2019. "The US solar panel anti-dumping duties versus uniform tariff," Energy Policy, Elsevier, vol. 127(C), pages 523-532.

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