Abstract
The author develops a quantity setting model of firm behavior that captures the twofold effects of a dumping margin between market periods. The dumping margin determines the probability of getting charged with dumping and the size of the fine imposed, if caught. Both the probability of being charged with dumping and the size of the fine associated with dumping are endogenized. Profits are inter-temporally linked. The solution concept is the pure strategy Markov Perfect Equilibrium. The results are appealing: a margin of dumping that recurs is relatively easy to find under uncertain enforcement. The author finds reason to believe that the current anti-dumping legal structure is not likely to cause either an end to dumping or price equalization.
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The author thanks Marie Thursby, Jim Moore, Dan Kovenock, and Yukiko Hirao for their work. Appreciation also goes to Jon Haveman for helpful suggestions and Usha Nair for noisy discussions. Any errors found in this paper are the responsibility of the author.
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Willner, J. Equilibrium dumping with endogenous anti-dumping penalties. International Advances in Economic Research 2, 120–131 (1996). https://doi.org/10.1007/BF02295051
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DOI: https://doi.org/10.1007/BF02295051