Arbeitspapier

Anti-dumping, Intra-industry Trade and Quality Reversals

We examine an export game where two firms (home and foreign), located in two differentcountries, produce vertically differentiated products. The foreign firm is the most efficientin terms of R&D costs of quality development and the foreign country is relatively larger andendowed with a relatively higher income. The unique (risk-dominant) Nash equilibrium involvesintra-industry trade where the foreign producer manufactures a good of higher quality thanthe domestic firm. This equilibrium is characterized by unilateral dumping by the foreignfirm into the domestic economy. Two instruments of anti-dumping (AD) policy are examined,namely, a price undertaking (PU) and an anti-dumping duty. We show that, when firms' costasymmetries are low and countries differ substantially in size, a PU leads to a quality reversalin the international market, which gives a rationale for the domestic government to enact ADlaw. We also establish an equivalence result between the effects of an AD duty and a PU.

Sprache
Englisch

Erschienen in
Series: Tinbergen Institute Discussion Paper ; No. 04-124/2

Klassifikation
Wirtschaft
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Trade Policy; International Trade Organizations
Thema
anti-dumping duty
intra-industry trade
price undertaking
product quality
quality reversals
Antidumping
Intraindustrieller Handel
Spieltheorie
Produktqualität
Theorie

Ereignis
Geistige Schöpfung
(wer)
Moraga-Gonzalez, Jose Luis
Viaene, Jean-Marie
Ereignis
Veröffentlichung
(wer)
Tinbergen Institute
(wo)
Amsterdam and Rotterdam
(wann)
2004

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Moraga-Gonzalez, Jose Luis
  • Viaene, Jean-Marie
  • Tinbergen Institute

Entstanden

  • 2004

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