Antidumping Policy Under Imperfect Competition: Theory and Evidence

Meredith Crowley ()

No 443, Econometric Society 2004 North American Summer Meetings from Econometric Society

Abstract: In this paper, I develop and test a model of dumping among imperfectly competitive firms in different countries that face stochastic demand. In the theoretical model, I show that foreign firms dump when they face weak demand in their own markets. I then show that an antidumping duty can improve an importing country's welfare by shifting some of the dumping firm's rents to the home country. I test this model using data on US antidumping cases from 1979 to 1996. Empirically, I find strong evidence that the US government is more likely to impose protection when demand in foreign countries is weak. After controlling for injury to the domestic industry and the strength of US aggregate demand, I find that reducing foreign aggregate demand two standard deviations below its trend increases the probability of protection by 2.8-3.4%.

Keywords: trade policy; dumping; antidumping (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 2004-08-11
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Persistent link: http://EconPapers.repec.org/RePEc:ecm:nasm04:443

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