Antidumping Regulations: Anti‐Competitive and Anti‐Export
David Collie and
Vo Phuong Mai Le
Review of International Economics, 2010, vol. 18, issue 5, 796-806
In a Bertrand duopoly model, it is shown that an antidumping regulation can be strategically exploited by the home firm to reduce the degree of competition in the home market. The home firm commits not to export to the foreign market which gives the foreign firm a monopoly in its own market. As a result the foreign firm will increase its price allowing the home firm to increase its price and its profits. If the products are sufficiently close substitutes then the higher profits in the home market are large enough to compensate for the loss of profits on exports.
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