Year: 2001
Title:
Do Anti-Dumping Rules Facilitate the Abuse of Market Dominance?
JEL: F12, F13
Authors:
M. Theuringer, Institute for Economic Policy
P. Wei§, Institute for Economic Policy
Abstract:
We discuss the effects of AD-protection in a standard Dixit model of entry deterrence. In an AD-regime, the newcomer is constrained by a minimum-price rule in addition to existing irreversible entrance costs. For minimum prices which lie below the Stackelberg one, we find that AD-rules distort competition. We show that AD-protection increases the advantages of entry deterrence for a wide range of combinations of sunk costs and minimum prices. When entrance costs are high, consumer welfare is lower in an AD-regime than under free trade. Consequently, AD-protection facilitates the abuse of market dominance.
Keywords:
anti-dumping; trade protection, strategic firm behaviour, abuse of market dominance
Contact address: m.theuringer at uni-koeln.de
Paper URL: http://www.uni-koeln.de/wiso-fak/iwp/dp/dp03_01.htm
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