2005-05-01
Dumping in a Global World: Why Product Quality Matters
Publication
Publication
The World Economy , Volume 28 - Issue 5 p. 669- 682
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 by the high-quality firm, depending on cross-country differences in incomes, the height of tariff protection and on exchange rate changes.
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doi.org/10.1111/j.1467-9701.2005.00699.x, hdl.handle.net/1765/12960 | |
The World Economy | |
Organisation | Erasmus School of Economics |