Self-Protection: Antidumping Duties, Collusion and FDI

Ronald Davies and Benjamin Liebman

University of Oregon Economics Department Working Papers from University of Oregon Economics Department

Abstract: It is well established that the threat of antidumping duties can help sustain collusion between a foreign firm and its domestic counterpart. However, when the foreign firm is a multinational, its subsidiary will fight against a new duty, potentially making this threat hollow and collusion less likely. We show that the multinational may therefore choose to submit to a tariff even under collusion since evidence indicates that duties are more difficult to remove than initiate. In this way, it is possible to obtain a greater degree of commitment, although it comes at a cost. Nevertheless, we show that this can be a more profitable strategy than those previously explored. In fact, we find several cases where subsidiaries of multinational firms have indeed filed for protection from their own parents.

Keywords: Antidumping; Collusion; Foreign Direct Investment (search for similar items in EconPapers)
JEL-codes: F13 F23 L13 (search for similar items in EconPapers)
Pages: 21
Date: 2003-07-01, Revised 2003-11-01
New Economics Papers: this item is included in nep-ifn
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Related works:
Journal Article: Self‐protection? Antidumping Duties, Collusion, and FDI* (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ore:uoecwp:2003-36

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