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Anti-Dumping with Heterogeneous Firms: New Protectionism for the New-New Trade Theory

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Abstract

This paper analyzes anti-dumping (AD) policies in a two-country model with heterogeneous firms in monopolistic competition. Effective AD legislation in one country imposes a no-dumping condition on firms exporting from the other country, altering their pricing both domestically and abroad. Some firms with intermediate productivities cease export activity, and entry shifts towards the AD protected country, which has now become relatively more attractive. Protecting firms with AD therefore increases the number of firms entering and eventually increases competition, and the consumers enjoy welfare gains. In the country without AD legislation, there is a welfare loss due to fewer entrants.

Suggested Citation

  • Gormsen, Christian, 2008. "Anti-Dumping with Heterogeneous Firms: New Protectionism for the New-New Trade Theory," Working Papers 08-24, University of Aarhus, Aarhus School of Business, Department of Economics.
  • Handle: RePEc:hhs:aareco:2008_024
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    File URL: http://research.asb.dk/fbspretrieve/3851/wp_08-24
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    Keywords

    Trade policy; Anti-dumping; Monopolistic competition; Heterogeneous firms;

    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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