Antidumping Policy.

Abstract

When an antidumping policy involves the imposition of duties, the threat of antidumping enforcement may alter strategic behavior under imperfect competition. This point is illustrated in a model where the foreign firm is a monopolist in its local market but competes with a domestic firm in the home country's market. The welfare effects of an antidumping policy are examined under quantity-setting and price-setting behavior with either perfect or imperfect substitutes. Imposing an antidumping policy frequently improves domestic welfare under quantity-setting behavior and typically worsens it under price-setting behavior. Surprisingly, foreign welfare may improve. Copyright 1993 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.