Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus
Anti-Dumping with Heterogeneous Firms: New Protectionism for the New-New Trade Theory
Abstract: This paper analyzes anti-dumping (AD) policies in a
two-country model with heterogeneous firms in monopolistic competition.
Effective AD legislation in one country imposes a no-dumping condition on
firms exporting from the other country, altering their pricing both
domestically and abroad. Some firms with intermediate productivities cease
export activity, and entry shifts towards the AD protected country, which
has now become relatively more attractive. Protecting firms with AD
therefore increases the number of firms entering and eventually increases
competition, and the consumers enjoy welfare gains. In the country without
AD legislation, there is a welfare loss due to fewer entrants.
Keywords: Trade policy; Anti-dumping; Monopolistic competition; Heterogeneous firms; (follow links to similar papers)
JEL-Codes: F12; F13; (follow links to similar papers)
32 pages, November 1, 2008
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