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Dynamic Dumping

Author

Listed:
  • Berck, Peter
  • Perloff, Jeffrey M

Abstract

A low-cost foreign firm lowers its initially high price--dumping if necessary--until it drives the higher cost domestic firms out of business,whereupon it raises its price. At no time, however, does the foreign firm predate (price below its marginal cost). Tariffs, quotas, and other policies that mandate a minimum number of domestic firms do not qualitatively change the price path (high price, low price, and limit price). The optimal tariff in this dynamic analysis is lower than the optimal tariff in a static analysis (to allow consumers to take advantage of the low-price period).

Suggested Citation

  • Berck, Peter & Perloff, Jeffrey M, 1988. "Dynamic Dumping," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt77n3k7jk, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt77n3k7jk
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    Cited by:

    1. Khan, Nadeem, 1994. "Firm's behavior in the presence of antidumping laws," ISU General Staff Papers 1994010108000011487, Iowa State University, Department of Economics.
    2. Staiger, Robert W., 1995. "International rules and institutions for trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 29, pages 1495-1551, Elsevier.

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