Do Developing Countries Benefit from Antidumping Laws? An Assessment Based upon a Theoretical Dumping Model

This paper develops an international Dumping model ofimperfect competition based upon developed and developing countries' comparative advantage. The main results of the analysis indicate: a) without trade impediments and a coordinated competition policy between trading countries, dumped products from foreign firms are beneficial for the dumped country under a broad range of market structures of these products because they increased social welfare. These benefits arise from cheaper imports and increasing competition in the domestic market; b) absence of a coordinated competition policy between trading countries may produce losses for the dumped country under imperfectly competitive markets; c) traditional antidumping duty suggested by the gatt not necessarily is welfare improving for the dumped country. Moreover, the welfare analysis suggests that antidumping tariffs are the least convenient trade policy for the dumped country. The first best policy is free trade together with a coordinated competition policy between countries; d) the model allows to identify alternative second best instruments for dumped countries.