English, Article, Journal or magazine article edition: Are Antidumping Duties an Antidote for Predation? Stefan Lutz; James Gaisford; Shan (Victor) Jiang

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Bookmark: http://trove.nla.gov.au/version/32624
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Are Antidumping Duties an Antidote for Predation?
Author
  • Stefan Lutz
  • James Gaisford
  • Shan (Victor) Jiang
Physical Description
  • preprint
Notes
  • Since price discrimination and selling below cost arise in the normal course of business and are usually legal for home firms, countering these practices by foreign firms provides a very weak rationale for antidumping duties. If antidumping duties were to provide a systematic defense against predation by foreign firms, however, a strong ''fair-trade'' justification would remain. This paper adapts the classic entry-deterrence analysis of Dixit (1979) and Brander and Spencer (1981) to provide a simple treatment of predation, which is applicable with price leadership as well as quantity leadership. Although situations of cross-border predation appear to be quite rare, foreign firms may sometimes find themselves in leadership positions if they have to make shipments and/​or set prices before their home rivals. This paper shows that, in the context of such an international leadership game, predation ma y occur without dumping and vice versa. Further, when dumping and predation do coexist, a sophisticated form of antidumping duty would prevent predation, but the simple antidumping duties that are generally observed in practice will often be insufficient. Consequently, the paper challenges the ''fair-trade'' view of antidumping policy as an antidote for predation and strengthens the foundation of the counter-argument that antidumping constitutes a new insidious form of protectionism and trade harassment, which is of particularly serious concerns for small countries.
  • trade, duopoly, Stackelberg, Cournot, antidumping, predation
  • RePEc:icr:wpicer:17-2009
Language
  • English
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