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Antidumping Policy Under Imperfect Competition: Theory and Evidence

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  • Meredith A. Crowley

Abstract

In this paper, I develop and test a model of dumping among imperfectly competitive firms in different countries that face stochastic demand. In the theoretical model, I show that foreign firms dump when they face weak demand in their own markets. I then show that an antidumping duty can improve an importing country's welfare by shifting some of the dumping firm's rents to the home country. I test this model using data on US antidumping cases from 1979 to 1996. Empirically, I find strong evidence that the US government is more likely to impose protection when demand in foreign countries is weak. After controlling for injury to the domestic industry and the strength of US aggregate demand, I find that reducing foreign aggregate demand two standard deviations below its trend increases the probability of protection by 2.8-3.4%.

Suggested Citation

  • Meredith A. Crowley, 2004. "Antidumping Policy Under Imperfect Competition: Theory and Evidence," Econometric Society 2004 North American Summer Meetings 443, Econometric Society.
  • Handle: RePEc:ecm:nasm04:443
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    References listed on IDEAS

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    1. Staiger, Robert W. & Wolak, Frank A., 1992. "The effect of domestic antidumping law in the presence of foreign monopoly," Journal of International Economics, Elsevier, vol. 32(3-4), pages 265-287, May.
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    4. Prusa, Thomas J., 1992. "Why are so many antidumping petitions withdrawn?," Journal of International Economics, Elsevier, vol. 33(1-2), pages 1-20, August.
    5. Hansen, Wendy L & Prusa, Thomas J, 1996. "Cumulation and ITC Decision-Making: The Sum of the Parts Is Greater Than the Whole," Economic Inquiry, Western Economic Association International, vol. 34(4), pages 746-769, October.
    6. Bruce A. Blonigen & Jee-Hyeong Park, 2004. "Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence," American Economic Review, American Economic Association, vol. 94(1), pages 134-154, March.
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    13. Moore, Michael O, 1992. "Rules or Politics? An Empirical Analysis of ITC Anti-dumping Decisions," Economic Inquiry, Western Economic Association International, vol. 30(3), pages 449-466, July.
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    Cited by:

    1. Blonigen, Bruce A. & Wilson, Wesley W., 2010. "Foreign subsidization and excess capacity," Journal of International Economics, Elsevier, pages 200-211.

    More about this item

    Keywords

    trade policy; dumping; antidumping;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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