Dumping and double crossing: The (in)effectiveness of cost-based trade policy under incomplete information

Dobrin R. Kolev and Thomas Prusa

Chapter 7 in Economic Effects of Antidumping, 2021, pp 129-152 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We argue that the rise of antidumping protection and the proliferation of voluntary export restraints (VERs) are fundamentally interrelated. We show that both can be explained by a cost-based definition of dumping when the domestic government has incomplete information about the foreign firm’s costs. Given that its costs are only imperfectly observed and knowing the government’s incentives to protect, efficient foreign firms will voluntarily restrain their exports prior to the antidumping investigation. In turn, the VER distorts the government’s perception of the foreign firm’s efficiency and leads to undesirably high duties regardless of the foreign firm’s efficiency.

Keywords: Antidumping; Trade Effects; USA; US; Trade Protection; Trade Barriers; Temporary Trade Barriers; Pricing Behaviour; Antidumping Law; Law; Cost-Based Trade Policy; Macroeconomy; Cumulation; ITC Decision-making; WTO; Safeguard Protection (search for similar items in EconPapers)
Date: 2021
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Related works:
Journal Article: Dumping and Double Crossing: The (In)Effectiveness of Cost-Based Trade Policy under Incomplete Information (2002)
Working Paper: Dumping and Double Crossing: The (In)Effectiveness of Cost-Based Trade Policy Under Incomplete Information (1999)
Working Paper: Dumping and Double Crossing: The (In)Effectiveness Of Cost-Based Trade Policy Under Incomplete Information (1999)
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