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Does Anti-dumping Enforcement Generate Threat?

Author

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  • Sagnik Bagchi
  • Surajit Bhattacharyya
  • K. Narayanan

Abstract

The last two decades have witnessed that countries across the world are guided by the rules and regulations of multilateral trading institutions (for example, World Trade Organization [WTO], International Monetary Fund [IMF]) in order to promote free and fair trade through gradual reduction in trade barriers. The world economy has noticed significant reduction in tariffs, yet we find a rise in non-tariff barriers (NTBs). However, we still find dumping and few other trade strategies of the exporting countries as a major hindrance to free and fair trade. Such behaviour has led to ‘contingent protection’ as a tool of new-protectionism. Among the contingent protection measures, anti-dumping (AD) has evolved as the most popular choice of strategy for the trading nations. The AD policy invokes a threat to the exporter and thereby can change its strategic behaviour. We describe the phenomenon of dumping through a price-leadership model and thereby compute the optimal level of AD duty that can offset dumping. Using a sequential game, we conclude that the credible threat of an AD duty restricts dumping and thereby leads to a win-win situation for both the foreign and domestic firms.

Suggested Citation

  • Sagnik Bagchi & Surajit Bhattacharyya & K. Narayanan, 2014. "Does Anti-dumping Enforcement Generate Threat?," Foreign Trade Review, , vol. 49(1), pages 31-44, February.
  • Handle: RePEc:sae:fortra:v:49:y:2014:i:1:p:31-44
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    References listed on IDEAS

    as
    1. 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.
    2. Thomas J. Prusa, 2001. "On the spread and impact of anti-dumping," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 591-611, August.
    3. Doreen Bekker, 2006. "The Strategic Use Of Anti-Dumping In International Trade," South African Journal of Economics, Economic Society of South Africa, vol. 74(3), pages 501-521, September.
    4. Reitzes, James D, 1993. "Antidumping Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(4), pages 745-763, November.
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    More about this item

    Keywords

    Price–leadership; dumping; anti-dumping duty; sequential game;

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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