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European antidumping policy and firms' strategic cholce of quality

Hylke Vandebussche and Xavier Wauthy

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: In this paper, we consider a European industry characterized by vertical product differentiation. Using a two-stage model with quality choice made before price competition takes place, we show that EU anti-dumping policy that takes the form of price-undertakings offers a powerful protection to domestic firms, but only at the price competition stage. Once the impact of the A-D policy on quality choices is taken into account, EuropeanWelfare as well as profits accruing to the domestic firm decrease whenever the free trade equilibrium is affected. Hence we show that European Antidumping policies may induce ”perverse” leapfrogging.

Keywords: Bertrand competition; Injury; Quality; Welfare; European antidumping policy (search for similar items in EconPapers)
JEL-codes: F13 L13 (search for similar items in EconPapers)
Pages: 21 pages
Date: 1999-08
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Working Paper: European Antidumping Policy and Firms' Strategic Choice of Quality (2000) Downloads
Working Paper: European antidumping policy and firms’ strategic choice of quality (1999) Downloads
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