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Protecting The Domestic Market: Industrial Policy And Strategic Firm Behavior

Author

Listed:
  • JENS METGE

    (Chemnitz University of Technology, Germany)

  • PIA WEISS

    (Nottingham University Business School, Jubilee Campus, Wollaton Rd, Nottingham NG8 1BB, United Kingdom)

Abstract

Asian firms frequently have to undercut domestic prices and subsidize switching costs in order to obtain a positive market share when entering European and the US markets. Such practices constitute dumping under Article VI of the General Agreement on Tariffs and Trade. We demonstrate that the mere existence of an administratively set minimum price, which is frequently used in assessing dumping allegations, protects domestic firms and has the effect of an additional entrance barrier for Asian firms. Consequently, competition policy should reassess GATT's antidumping regulation in order to keep markets open and domestic competition healthy.

Suggested Citation

  • Jens Metge & Pia Weiss, 2011. "Protecting The Domestic Market: Industrial Policy And Strategic Firm Behavior," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 56(02), pages 159-174.
    • Handle: RePEc:wsi:serxxx:v:56:y:2011:i:02:n:s0217590811004183
    DOI: 10.1142/S0217590811004183
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Industrial policy; antidumping; switching costs; market entry; D21; L13; L52;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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