IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v80y2013i1p81-105.html
   My bibliography  Save this article

Antidumping as Strategic Trade Policy under Asymmetric Information

Author

Listed:
  • Xenia Matschke
  • Anja Schöttner

Abstract

Trade liberalization under GATT/World Trade Organization (WTO) has been partly offset by an increase in antidumping protection, possibly due to the inclusion of sales below cost in the definition of dumping. This article investigates the domestic government's antidumping duty choice in an asymmetric information framework, in which the foreign firm's cost is observed by the domestic firm, but not by the government. We show that by designing a tariff schedule contingent on firms' cost reports and accompanied by a threat to collect additional information for report verification, the domestic government may not only be able to extract the true cost information, but also succeed in implementing the full‐information, governmental welfare‐maximizing duty. The antidumping framework within GATT/WTO may thus not only offer the means to pursue strategic trade policy disguised as fair trade policy, but it also helps overcome informational problems with regard to correctly determining the optimal strategic trade policy.

Suggested Citation

  • Xenia Matschke & Anja Schöttner, 2013. "Antidumping as Strategic Trade Policy under Asymmetric Information," Southern Economic Journal, John Wiley & Sons, vol. 80(1), pages 81-105, July.
    • Handle: RePEc:wly:soecon:v:80:y:2013:i:1:p:81-105
    DOI: 10.4284/0038-4038-2010.028
    as

    Download full text from publisher

    File URL: https://doi.org/10.4284/0038-4038-2010.028
    Download Restriction: no
    File URL: https://libkey.io/10.4284/0038-4038-2010.028?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Philippe Kohler & Michael O. Moore, 2001. "Injury-Based Protection with Auditing under Imperfect Information," Southern Economic Journal, John Wiley & Sons, vol. 68(1), pages 42-59, July.
    2. Leonard K. Cheng & Larry D. Qiu & Kit Pong Wong, 2001. "Anti-dumping measures as a tool of protectionism: A mechanism design approach," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 639-660, August.
    3. Bruce A. Blonigen, 2006. "Evolving discretionary practices of U.S. antidumping activity," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(3), pages 874-900, August.
    4. Dobrin R. Kolev & Thomas J. Prusa, 2021. "Dumping and double crossing: The (in)effectiveness of cost-based trade policy under incomplete information," World Scientific Book Chapters, in: Thomas J Prusa (ed.), Economic Effects of Antidumping, chapter 7, pages 129-152, World Scientific Publishing Co. Pte. Ltd..
    5. Barbara J. Spencer & James A. Brander, 1982. "Tariff Protection and Imperfect Competition," Working Paper 517, Economics Department, Queen's University.
    6. Robert W. Staiger & Frank A. Wolak, 1989. "Strategic Use of Antidumping Law to Enforce Tacit International Collusion," NBER Working Papers 3016, National Bureau of Economic Research, Inc.
    7. Michael Moore & Alan Fox, 2010. "Why don’t foreign firms cooperate in US antidumping investigations? An empirical analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 597-613, January.
    8. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
    9. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455, Elsevier.
    10. Bruce A. Blonigen & Thomas J. Prusa, 2001. "Antidumping," NBER Working Papers 8398, National Bureau of Economic Research, Inc.
    11. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Phillip McCalman & Frank Stähler & Gerald Willmann, 2019. "Contingent trade policy and economic efficiency," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(2), pages 227-255, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kyle Bagwell & Robert W. Staiger, 2012. "Profit Shifting And Trade Agreements In Imperfectly Competitive Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(4), pages 1067-1104, November.
    2. Praveen Kujal & Juan Ruiz, 2003. "International Trade Policy towards Monopolies and Oligopolies," International Trade 0302002, University Library of Munich, Germany, revised 24 Mar 2003.
    3. Furusawa, Taiji & Higashida, Keisaku & Ishikawa, Jota, 2003. "What information is needed for welfare-enhancing policies under international oligopoly?," Japan and the World Economy, Elsevier, vol. 15(1), pages 31-46, January.
    4. Bernard, Jean-Thomas & Dupéré, Marc & Roland, Michel, 2003. "International Competition between Public or Mixed Enterprises," Cahiers de recherche 0301, Université Laval - Département d'économique.
    5. Chad P. Bown, 2010. "China's WTO Entry: Antidumping, Safeguards, and Dispute Settlement," NBER Chapters, in: China's Growing Role in World Trade, pages 281-337, National Bureau of Economic Research, Inc.
    6. Haufler, Andreas & Pflüger, Michael, 2003. "Market structure and the taxation of international trade," Discussion Papers in Economics 106, University of Munich, Department of Economics.
    7. Reimer, Jeffrey J. & Stiegert, Kyle W., 2006. "Evidence on Imperfect Competition and Strategic Trade Theory," Staff Paper Series 498, University of Wisconsin, Agricultural and Applied Economics.
    8. Spencer, Barbara J., 1988. "Capital subsidies and countervailing duties in oligopolistic industries," Journal of International Economics, Elsevier, vol. 25(1-2), pages 45-69, August.
    9. Kind, Hans Jarle & Midelfart, Karen Helene & Schjelderup, Guttorm, 2005. "Corporate tax systems, multinational enterprises, and economic integration," Journal of International Economics, Elsevier, vol. 65(2), pages 507-521, March.
    10. Colacicco, Rudy, 2024. "Strategic trade policy in general oligopolistic equilibrium: The case of import tariffs," Research in Economics, Elsevier, vol. 78(2).
    11. Krugman, Paul R., 1989. "Industrial organization and international trade," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 20, pages 1179-1223, Elsevier.
    12. Praveen Kujal & Juan M. Ruiz, 2009. "International Trade Policy towards Monopoly and Oligopoly," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 461-475, August.
    13. Ryuzo Sato & Rama Ramachandran & Shunichi Tsutsui, 1991. "Incomplete Appropriability of R&D and the Role of Strategies and Cultural Factors in International Trade: A Japanese Case," NBER Working Papers 3797, National Bureau of Economic Research, Inc.
    14. Chang, Winston W. & Ryu, Han Eol, 2016. "Export rivalry, vertically-related markets, and optimal public ownership policy," Economic Modelling, Elsevier, vol. 54(C), pages 392-401.
    15. Dermot Leahy & J. Peter Neary, 2013. "Oligopoly and Trade," Palgrave Macmillan Books, in: Daniel Bernhofen & Rod Falvey & David Greenaway & Udo Kreickemeier (ed.), Palgrave Handbook of International Trade, chapter 7, pages 197-235, Palgrave Macmillan.
    16. Ruseski, Gorazd, 1998. "International Fish Wars: The Strategic Roles for Fleet Licensing and Effort Subsidies," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 70-88, July.
    17. Akio Matsumoto & Nobuko Serizawa, 2007. "Strategic trade policy under isoelastic demand and asymmetric production costs," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(3), pages 525-543, September.
    18. Colacicco, Rudy, 2012. "Strategic Trade Policy in General Oligopolistic Equilibrium," MPRA Paper 38118, University Library of Munich, Germany.
    19. Bruce A. Blonigen & Thomas J. Prusa, 2001. "Antidumping," NBER Working Papers 8398, National Bureau of Economic Research, Inc.
    20. Hoefele, Andreas, 2016. "Endogenous product differentiation and international R&D policy," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 335-346.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:80:y:2013:i:1:p:81-105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.