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Under the Cover of Antidumping: Does Administered Protection Facilitate Domestic Collusion?

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  • Kara M. Reynolds

Abstract

Anecdotal evidence suggests that domestic firms can use the antidumping petition process to engage in collusion and increase domestic prices. In this paper, I test whether the antidumping petition process itself can help domestic firms raise prices. I propose a method to identify whether firms in the industry experience a structural break in the level of market power held by the firms at the time that they file their antidumping petition. I then use this methodology to analyze the impact of antidumping petitions on competition levels in two industries. I find little evidence that either of these industries increased their market power following the filing of petitions for trade relief, nor even from the protection that resulted from these petitions, suggesting that the widespread belief that antidumping leads to more market power may not always hold.

Suggested Citation

  • Kara M. Reynolds, 2013. "Under the Cover of Antidumping: Does Administered Protection Facilitate Domestic Collusion?," Working Papers 2013-05, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:2013-05
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    1. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
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    3. Hartigan, James C & Kamma, Sreenivas & Perry, Philip R, 1989. "The Injury Determination Category and the Value of Relief from Dumping," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 183-186, February.
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    5. Taylor, Christopher T., 2004. "The economic effects of withdrawn antidumping investigations: is there evidence of collusive settlements?," Journal of International Economics, Elsevier, vol. 62(2), pages 295-312, March.
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    7. Maurizio Zanardi, 2004. "Antidumping law as a collusive device," Canadian Journal of Economics, Canadian Economics Association, vol. 37(1), pages 95-122, February.
    8. Konings, Jozef & Vandenbussche, Hylke, 2005. "Antidumping protection and markups of domestic firms," Journal of International Economics, Elsevier, vol. 65(1), pages 151-165, January.
    9. James Nieberding, 1999. "The Effect of U.S. Antidumping Law on Firms' Market Power: An Empirical Test," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(1), pages 65-84, February.
    10. Martin, Stephen, 1988. "The measurement of profitability and the diagnosis of market power," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 301-321.
    11. Aleksander Rutkowski, 2007. "Withdrawals of Anti-dumping Complaints in the EU: A Sign of Collusion," The World Economy, Wiley Blackwell, vol. 30(3), pages 470-503, March.
    12. Corts, Kenneth S., 1998. "Conduct parameters and the measurement of market power," Journal of Econometrics, Elsevier, vol. 88(2), pages 227-250, November.
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