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Market share, cost-based dumping, and anti-dumping policy

Author

Listed:
  • Thusnelda Tivig
  • Uwe Walz

Abstract

This paper studies the occurrence of dumping and the implications of anti-dumping duties in a deterministic price-setting two-period duopoly model for differentiated products. When current market shares matter for future demand, cost-based dumping can be profitable. Dumping thus arises as a form of investment in market shares. This might trigger the application of anti-dumping law. We further show that correctly anticipated duties do not necessarily hinder firms from selling below costs. The mere existence of anti-dumping law, however, significantly changes the structure of the game, leading to higher first-period prices for both firms.

Suggested Citation

  • Thusnelda Tivig & Uwe Walz, 2000. "Market share, cost-based dumping, and anti-dumping policy," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 69-86, February.
  • Handle: RePEc:cje:issued:v:33:y:2000:i:1:p:69-86
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    Citations

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    Cited by:

    1. Sagnik Bagchi & Surajit Bhattacharyya & K. Narayanan, 2014. "Does Anti-dumping Enforcement Generate Threat?," Foreign Trade Review, , vol. 49(1), pages 31-44, February.
    2. Nelson, Douglas, 2006. "The political economy of antidumping: A survey," European Journal of Political Economy, Elsevier, vol. 22(3), pages 554-590, September.
    3. Kao, Kuo-Feng & Peng, Cheng-Hau, 2016. "Anti-dumping protection, price undertaking and product innovation," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 53-64.
    4. Shibayama, Chisato & Ishii, Yasunori, 2008. "Multiproduct firms and dumping," ビジネス創造センターディスカッション・ペーパー (Discussion papers of the Center for Business Creation) 10252/1026, Otaru University of Commerce.
    5. Baomin Dong, 2013. "Cost-Based Anti-dumping as a Repeated Game," The Economic Record, The Economic Society of Australia, vol. 89, pages 95-105, June.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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