PROTECTING THE DOMESTIC MARKET: INDUSTRIAL POLICY AND STRATEGIC FIRM BEHAVIOR

Jens Metge and Pia Weiss ()
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Jens Metge: Chemnitz University of Technology, Germany
Pia Weiss: Nottingham University Business School, Jubilee Campus, Wollaton Rd, Nottingham NG8 1BB, United Kingdom

The Singapore Economic Review (SER), 2011, vol. 56, issue 02, 159-174

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.

Keywords: Industrial policy; antidumping; switching costs; market entry; D21; L13; L52 (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1142/S0217590811004183

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