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Working Papers, No. 2001-21, 2001
Antidumping Policy Under Imperfect Competition: Theory and Evidence
In this paper, I develop and test a model of dumping among imperfectly competitive firms in different countries that face stochastic demand. In the theoretical model, I show that foreign firms dump when they face weak demand in their own markets. I then show that an antidumping duty can improve an importing country's welfare by shifting some of the dumping firm's rents to the home country. I test this model using data on US antidumping cases from 1979 to 1996. Empirically, I find strong evidence that the US government is more likely to impose protection when demand in foreign countries is weak.
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