 Dumping, antidumping duties, and price undertakingsYang-Ming Chang and Mian F. Raza Research in Economics, 2023, vol. 77, issue 1, 131-151 Abstract: This paper examines which types of firms, from a developed country (DC) or a less developed country (LDC), tend to practice dumping, using a two-market equilibrium analysis of trade in similar products. Specifically, we present a vertical product differentiation model of duopolistic competition between a DC firm and an LDC firm under free trade to show that the DC firm sells a higher-quality product without dumping. In contrast, the LDC firm sells a lower-quality product and practices dumping in the DC market by charging a price lower than the product's price in the LDC's local market. In response to the LDC dumping, the DC government's use of an optimal antidumping duty increases its domestic welfare. The LDC's social welfare may increase if its exporting firm accepts price undertaking rather than dumping. From the perspective of world welfare, defined by aggregating the welfare of the trading countries (DC and LDC), the trade damage measure through imposing antidumping fines on LDC dumping is Pareto-improving compared to free trade (under which dumping takes place) and price undertakings. Keywords: Dumping; Free trade; Antidumping duties; Price undertaking; Product quality; Welfare (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:77:y:2023:i:1:p:131-151 DOI: 10.1016/j.rie.2023.01.004 Access Statistics for this article Research in Economics is currently edited by Federico Etro More articles in Research in Economics from Elsevier |
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