WTO's Anti-dumping Rule and the Protection of Incumbents

Uwe Dulleck

Vienna Economics Papers from University of Vienna, Department of Economics

Abstract: Article VI of the GATT allows counter measures of goods are sold on a foreign market at a price below average production plus transportation costs. The present article analyzes Article VI based on a simple game theoretic model with two countries and economies of scale in the production of one homogeneous good. It is shown that multiple equilibria exist under the WTO rule for some parameter values which do not exist without the rule. In some equilibria the incumbent serves the entire market even if the entrant can porduce at lower costs. The model supports the criticism of the anti-dumping rule as an instrument of protection by industrialized countries against competition from developing countries.

JEL-codes: F12 F13 L13 (search for similar items in EconPapers)
Date: 2004-03
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Journal Article: WTO's Anti-dumping Rule and the Protection of Incumbents (2005)
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