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Does Anti-dumping Enforcement Generate Threat?

Author

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  • Bagchi, Sagnik
  • Bhattacharyya, Surajit
  • Narayanan, Krishnan

Abstract

The last two decades have witnessed that countries across the world are guided by the rules and regulations of multilateral trading institutions (for example, World Trade organization [WTO], International Monetary Fund [IMF]) in order to promote free and fair trade through gradual reduction in trade barriers. The World economy has noticed significant reduction in tariffs, yet we find a rise in non-tariff barriers (NTBs). However, we still find dumping and few other trade strategies of the exporting countries as a major hindrance to free and fair trade. Such behaviour has led to “contingent protection” as a tool of new-protectionism. Among the contingent protection measures, anti-dumping (AD) has evolved as the most popular choice of strategy for the trading nations. The AD policy invokes a threat to the exporter and thereby can change its strategic behaviour. We describe the phenomenon of dumping through a price-leadership model and thereby compute the optimal level of anti-dumping duty that can offset dumping. Using a sequential game, we conclude that the credible threat of an AD duty restricts dumping and thereby leads to a win-win situation for both the foreign and domestic firms.

Suggested Citation

  • Bagchi, Sagnik & Bhattacharyya, Surajit & Narayanan, Krishnan, 2014. "Does Anti-dumping Enforcement Generate Threat?," MPRA Paper 53627, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:53627
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    References listed on IDEAS

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    1. Reitzes, James D, 1993. "Antidumping Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(4), pages 745-763, November.
    2. Thomas J. Prusa, 2021. "On the spread and impact of anti-dumping," World Scientific Book Chapters, in: Thomas J Prusa (ed.), Economic Effects of Antidumping, chapter 4, pages 45-65, World Scientific Publishing Co. Pte. Ltd..
    3. Thusnelda Tivig & Uwe Walz, 2000. "Market share, cost‐based dumping, and anti‐dumping policy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 33(1), pages 69-86, February.
    4. Doreen Bekker, 2006. "The Strategic Use Of Anti‐Dumping In International Trade," South African Journal of Economics, Economic Society of South Africa, vol. 74(3), pages 501-521, September.
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    Cited by:

    1. Sagnik Bagchi & Surajit Bhattacharyya & K. Narayanan, 2015. "Anti-dumping Initiations in Indian Manufacturing Industries," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 16(2), pages 278-294, September.
    2. Neha B. Upadhayay, 2020. "Are only men fighting trade wars? Empirical evidence from the Temporary Trade Barriers (TTB) data," Erudite Working Paper 2020-03, Erudite.
    3. Neha Bhardwaj Upadhayay, 2020. "Uncovering the proliferation of contingent protection through channels of retaliation, gender and development assistance," Erudite Ph.D Dissertations, Erudite, number ph20-02 edited by Julie Lochard & Catherine Bros.
    4. Omphemetse S. Sibanda Sr, 2020. "Procedural Requirements of the South African Anti-Dumping Law and Practice Prior to Imposition of Anti-Dumping Duties: Are They Really WTO-inconsistent?," Foreign Trade Review, , vol. 55(2), pages 216-238, May.

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    More about this item

    Keywords

    Price-leadership; Dumping; Anti-dumping duty; Sequential game;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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