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Antidumping policy under imperfect competition

  • Meredith A. Crowley

As average tariff rates have fallen, countries have increasingly turned to GATT-sanctioned ``special protection'' - especially antidumping duties - to restrict imports when import volumes increase suddenly. In this paper, I analyze a model of dumping among imperfectly competitive firms that face stochastic demand. I show that an antidumping duty can improve an importing-country's welfare when it faces dumping caused by weak foreign demand. Interestingly, the antidumping duty does not completely stem the tide of dumped imports, but it improves welfare through shifting some of the dumping firm's rents to the home country. Even when faced with an antidumping duty, a foreign firm that serves more than one market will prefer dumping and paying an antidumping duty over negotiating a voluntary export restraint because dumping allows it to earn higher revenues in its own market.

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Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-01-21.

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Date of creation: 2001
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Handle: RePEc:fip:fedhwp:wp-01-21
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  1. Anderson, James E, 1992. "Domino Dumping, I: Competitive Exporters," American Economic Review, American Economic Association, vol. 82(1), pages 65-83, March.
  2. Crowley, Meredith A., 2006. "Do safeguard tariffs and antidumping duties open or close technology gaps?," Journal of International Economics, Elsevier, vol. 68(2), pages 469-484, March.
  3. Wendy L. Hansen & Thomas J. Prusa, 1996. "The Economics and Politics of Trade Policy: An Empirical Analysis of ITC Decision Making," Departmental Working Papers 199621, Rutgers University, Department of Economics.
  4. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  5. Robert E. Baldwin & Jeffrey W. Steagall, 1993. "An Analysis of Factors Influencing ITC Decisions in Antidumoing, Countervailing Duty and Safeguard Cases," NBER Working Papers 4282, National Bureau of Economic Research, Inc.
  6. Bruce A. Blonigen & Jee-Hyeong Park, 2001. "Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence," NBER Working Papers 8477, National Bureau of Economic Research, Inc.
  7. Dixit, Avinash, 1988. "Anti-dumping and countervailing duties under oligopoly," European Economic Review, Elsevier, vol. 32(1), pages 55-68, January.
  8. Richard H. Clarida, 1991. "Entry, Dumping, and Shakeout," NBER Working Papers 3814, National Bureau of Economic Research, Inc.
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  10. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
  11. Van de Ven, Wynand P. M. M. & Van Praag, Bernard M. S., 1981. "The demand for deductibles in private health insurance : A probit model with sample selection," Journal of Econometrics, Elsevier, vol. 17(2), pages 229-252, November.
  12. Wendy L. Hansen & Thomas J. Prusa, 1995. "Cumulation and ITC Decision-Making: The Sum of the Parts is Greater thanthe Whole," NBER Working Papers 5062, National Bureau of Economic Research, Inc.
  13. Michael M. Knetter & Thomas J. Prusa, 2000. "Macroeconomic Factors and Antidumping Filings: Evidence from Four Countries," NBER Working Papers 8010, National Bureau of Economic Research, Inc.
  14. 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.
  15. 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 449-66, July.
  16. Bruce A. Blonigen & Thomas J. Prusa, 2001. "Antidumping," NBER Working Papers 8398, National Bureau of Economic Research, Inc.
  17. James A. Brander & Barbara J. Spencer, 1983. "Trade Warfare: Tariffs and Cartels," NBER Working Papers 1193, National Bureau of Economic Research, Inc.
  18. Gruenspecht, Howard K., 1988. "Dumping and dynamic competition," Journal of International Economics, Elsevier, vol. 25(3-4), pages 225-248, November.
  19. Prusa, Thomas J., 1992. "Why are so many antidumping petitions withdrawn?," Journal of International Economics, Elsevier, vol. 33(1-2), pages 1-20, August.
  20. Robert Baldwin & Jeffrey Steagall, 1994. "An analysis of ITC decisions in antidumping, countervailing duty and safeguard cases," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(2), pages 290-308, June.
  21. Robert Staiger & Frank Wolak, 1994. "Measuring Industry Specific Protection: Antidumping in the United States," International Trade 9410004, EconWPA.
  22. 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 745-63, November.
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