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Do Anti-Dumping Rules Facilitate the Abuse of Market Dominance?

Author

Listed:
  • Martin Theuringer

    (University Cologne)

  • Pia Weiss

    (Institute for Economic Policy)

Abstract

We discuss the effects of AD-protection in a standard Dixit model of entry deterrence. In an AD-regime, the newcomer is constrained by a minimum-price rule in addition to existing irreversible entrance costs. For minimum prices which lie below the Stackelberg one, we find that AD- rules distort competition. We show that AD-protection increases the advantages of entry deterrence for a wide range of combinations of sunk costs and minimum prices. When entrance costs are hight, consumer welfare is lower in an AD-regime than under free trade. Consequently, AD-protection facilitates the abuse of market dominance.

Suggested Citation

  • Martin Theuringer & Pia Weiss, 2001. "Do Anti-Dumping Rules Facilitate the Abuse of Market Dominance?," International Trade 0108002, EconWPA.
  • Handle: RePEc:wpa:wuwpit:0108002
    Note: Type of Document - Acrobat; prepared on Linux; to print on HP/PostScript; pages: 39 ; figures: included
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    References listed on IDEAS

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    1. James A. Brander & Barbara J. Spencer, 1981. "Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry," Canadian Journal of Economics, Canadian Economics Association, vol. 14(3), pages 371-389, August.
    2. Wilfried Pauwels & Hylke Vandenbussche & Marcel Weverbergh, 2001. "Strategic Behaviour under European Antidumping Duties," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(1), pages 75-99.
    3. Finger, J. Michael & Schuknecht, Ludger, 1999. "Market access advances and retreats : the Uruguay Round and beyond," Policy Research Working Paper Series 2232, The World Bank.
    4. 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 745-763, November.
    5. Robert W. Staiger & Frank A. Wolak, 1989. "Strategic Use of Antidumping Law to Enforce Tacit International Collusion," NBER Working Papers 3016, National Bureau of Economic Research, Inc.
    6. Prusa, Thomas J., 1992. "Why are so many antidumping petitions withdrawn?," Journal of International Economics, Elsevier, vol. 33(1-2), pages 1-20, August.
    7. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
    8. Fischer, Ronald D., 1992. "Endogenous probability of protection and firm behavior," Journal of International Economics, Elsevier, vol. 32(1-2), pages 149-163, February.
    9. Bruce A. Blonigen & Thomas J. Prusa, 2001. "Antidumping," NBER Working Papers 8398, National Bureau of Economic Research, Inc.
    10. Campbell, Neil, 2000. "Import Quotas and Entry Deterrence," Australian Economic Papers, Wiley Blackwell, vol. 39(2), pages 152-158, June.
    11. Moore, Michael O., 2005. ""Facts available" dumping allegations: when will foreign firms cooperate in antidumping petitions?," European Journal of Political Economy, Elsevier, vol. 21(1), pages 185-204, March.
    12. Dixit, Avinash K & Kyle, Albert S, 1985. "The Use of Protection and Subsidies for Entry Promotion and Deterrence," American Economic Review, American Economic Association, vol. 75(1), pages 139-152, March.
    13. Michael O. Moore, 2005. "VERs and Price Undertakings under the WTO," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 298-310, May.
    14. Arvind Panagariya & Poonam Gupta, 1998. "Anti-dumping Duty versus Price Negotiations," The World Economy, Wiley Blackwell, vol. 21(8), pages 1003-1019, November.
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    More about this item

    Keywords

    anti-dumping; abuse of market dominance; strategic firm behaviour;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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