Dumping in a Global World
May 2004
Research Paper
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Anti-dumping actions are now the trade policy of choice of developing and transition economies. To understand why these economies have increasingly applied anti-dumping laws, we build a simple theoretical model of vertical intra-industry trade and investigate the strategic incentives of exporting firms to undertake dumping. We show that the definition of dumping matters. Based on a comparison of low-quality and high-quality prices, only unilateral dumping by the low-quality firm obtains. By contrast, the standard WTO definition leads to either reciprocal or unilateral dumping depending on differences in incomes and on the height of tariff protection and of the exchange rate depreciations.
Keywords
Classifications using
Journal of Economic Literature (JEL) Classification System
- P31 : Socialist Enterprises and Their Transitions
- F13 : Commercial Policy; Protection; Promotion; Trade Negotiations; International Organizations
- F12 : Models of Trade with Imperfect Competition and Scale Economies
Automatically Extracted Terms
- quality
- price
- exchange
- market
- trade
- product
- transition economies
- country
- exchange rate
- currency
- export
- economy
- model
- equilibrium
- currency price
- transition
- injury
- function
- demand
- tariff
