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Self-Protection: Antidumping Duties, Collusion and FDI

Author

Listed:
  • Ronald B. Davies

    () (University of Oregon Economics Department)

  • Benjamin Liebman

    () (St. Joseph's University Economics Department)

Abstract

It is well established that the threat of antidumping duties can help sustain collusion between a foreign firm and its domestic counterpart. However, when the foreign firm is a multinational, its subsidiary will fight against a new duty, potentially making this threat hollow and collusion less likely. We show that the multinational may therefore choose to submit to a tariff even under collusion since evidence indicates that duties are more difficult to remove than initiate. In this way, it is possible to obtain a greater degree of commitment, although it comes at a cost. Nevertheless, we show that this can be a more profitable strategy than those previously explored. In fact, we find several cases where subsidiaries of multinational firms have indeed filed for protection from their own parents.

Suggested Citation

  • Ronald B. Davies & Benjamin Liebman, 2003. "Self-Protection: Antidumping Duties, Collusion and FDI," University of Oregon Economics Department Working Papers 2003-36, University of Oregon Economics Department, revised 01 Nov 2003.
  • Handle: RePEc:ore:uoecwp:2003-36
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    File URL: http://economics.uoregon.edu/papers/UO-2003-36_Davies_Liebman_Self-Protection.pdf
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    References listed on IDEAS

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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
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    Cited by:

    1. David R. Collie & Vo Phuong Mai Le, 2010. "Antidumping Regulations: Anti-Competitive and Anti-Export," Review of International Economics, Wiley Blackwell, vol. 18(5), pages 796-806, November.

    More about this item

    Keywords

    Antidumping; Collusion; Foreign Direct Investment;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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