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Title: Strategic Behaviour under European Antidumping Rules

Author(s): Wilfried Pauwels, Hylke Vandenbussche and Marcel Weverbergh

Publication Date: February 1997

Keyword(s): Anti-Dumping, Imperfect Competition and Two-period Cournot Oligopoly

Programme Area(s): International Trade and Regional Economics

Abstract: This paper analyses how European anti-dumping policy under imperfect competition affects firm behaviour and domestic welfare. Our theoretical model is the first to complement the European empirical literature on anti-dumping policy (see Messerlin (1989), Hindley (1988), Tharakan and Waelbroeck (1994)), and can usefully be compared with recent papers dealing with the effects of US anti-dumping policy (Reitzes (1993), Fischer (1992), Prusa (1994)). We use a two-period Cournot duopoly model with a European and a foreign firm that differ in costs and products. European anti-dumping policy differs from its US counterpart mainly in terms of injury margin calculation and the derivation of the anti-dumping duty. European anti-dumping rules provide the home firm with incentives to either induce or to feign injury. Our results indicate that when the level of protection is endogenous, the strategic trade policy argument for protection need not apply. Our findings also suggest that US anti-dumping rules perform better than European rules in terms of welfare and in terms of protecting domestic value added and employment.

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Bibliographic Reference

Pauwels, W, Vandenbussche, H and Weverbergh, M. 1997. 'Strategic Behaviour under European Antidumping Rules'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1565