Does Anti-dumping Enforcement Generate Threat?. (February 2014)

• Record Type: Journal Article
• Authors: Bagchi, Sagnik; Bhattacharyya, Surajit; Narayanan, K.
• Is Part Of: Foreign trade review. Volume 49:Number 1(2014:Feb.)
• Page Start: 31
• Page End: 44
• Publication Date: 2014-02
• Subjects: C02 -- C72 -- D43 -- F13 -- L40; Price–leadership -- dumping -- anti-dumping duty -- sequential game; 382.0954005
• DOI: 10.1177/0015732513515988
• Languages: English
• ISSNs: 0015-7325

Abstract

The last two decades have witnessed that countries across the world are guided by the rules and regulations of multilateral trading institutions (for example, World Trade Organization [WTO], International Monetary Fund [IMF]) in order to promote free and fair trade through gradual reduction in trade barriers. The world economy has noticed significant reduction in tariffs, yet we find a rise in non-tariff barriers (NTBs). However, we still find dumping and few other trade strategies of the exporting countries as a major hindrance to free and fair trade. Such behaviour has led to 'contingent protection' as a tool of new-protectionism . Among the contingent protection measures, anti-dumping (AD) has evolved as the most popular choice of strategy for the trading nations. The AD policy invokes a threat to the exporter and thereby can change its strategic behaviour. We describe the phenomenon of dumping through a price-leadership model and thereby compute the optimal level of AD duty that can offset dumping. Using a sequential game, we conclude that the credible threat of an AD duty restricts dumping and thereby leads to a win-win situation for both the foreign and domestic firms.