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Alternative Effects of Antidumping Policy: Should Mexican Authorities be Worried?

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  • Alfonso Mendieta

    (School of Economic and Social Studies, University of East Anglia)

Abstract

Administered protection is not the only outcome of antidumping measures. This paper suggests a basic model of repeated interaction between a domestic and a foreign firm. Competing in prices in the importing market, antidumping action serves as the means to enforce and sustain tacit collusion between the firms. The main result is that price distortions by antidumping policy are a departure point for the achievement of the collusive outcome. Discount factors of future profits are altered relative to those observed under free trade, delaying domestic firm’s propensity to collude and prompting foreign firm’s.

Suggested Citation

  • Alfonso Mendieta, 2005. "Alternative Effects of Antidumping Policy: Should Mexican Authorities be Worried?," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(1), pages 41-69, January-J.
    • Handle: RePEc:emc:ecomex:v:14:y:2005:i:1:p:41-69
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    File URL: http://www.economiamexicana.cide.edu/num_anteriores/XIV-1/02_ALternative_effects.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    price competition; repeated interaction; tacit collusion; antidumping;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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