On Optimal Dumping

Sajal Lahiri and Jeffrey Sheen

Economic Journal, 1990, vol. 100, issue 400, 127-36

Abstract: It is generally believed that, in the absence of retaliation, a country can enhance its welfare by dumping its product on another country. Antidumping policies, in the form of countervailing duties, are usually introduced by the dumped-upon countries. In this paper, the authors show that it may in fact be in the social interest of the dumping country to introduce a "voluntary dumping restraint" policy. It is also shown that such a policy can be enacted without the government having to forbid dumping by the private producers: an optimal production subsidy policy may be enough to preempt dumping. Copyright 1990 by Royal Economic Society.

Date: 1990
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