Microscopic Analysis Of Anti-dumping Behavior And Corporate Strategy

The various rounds of GATT/WTO have consistently decreased tariff barriers worldwide. However, perhaps as a counterbalancing effect, non-tariff barriers have grown over time. Among these, antidumping has surged to play a crucial role as the most important non-tariff barrier. Originally devised as a remedy to the unfair practice of dumping, it is nowadays widely recognized as a successful form of protectionism that basically lost any connection with dumping. AD allow GATT/WTO members to offer their biased industry protection without blatantly violating GATT/WTO principles. AD is a trade policy where the institutional process surrounding the investigation and determinations has significant impacts beyond the antidumping duty we observe."Antidumping and the microeconomical analysis of firms' strategic behavior" is to analyzes the firms' strategic behavior under the AD law. A crucial feature of AD law that creates the incentives for strategic behavior on the part of firms is the use of established criteria based on prior market outcomes to make AD case determinations. This allows relevant firms to act strategically to influence AD outcomes. This paper provides a model of two stages, where AD authority claims the AD criteria, and firms compete in the first stage, and in the second stage the AD authority imposes trade protection based on market outcomes of the first stage. The focus is on the first stage, where the firms strategically alter their quantity behavior to influence the second-stage AD outcome. Firms strategic behavior influence not only the dumping determination, but the injury determination in their favor. The foreign firm tries to lessen the chance of trade protection, but the domestic firm will act to make trade protection more likely. That is, the filling decision, the legal determination and the protective impact are all endogenous with firms' decisions in the market. This is the main conclusion of chapter 6 in this paper.The AD law which has anticompetitive consequences and restricting trade effect creats two distinct filling strategies — outcome filers and process filers. Outcomefillers is motivated by the expectation that they can secure a finding of dumping. Process fillers file petitions largely for the trade-restricting effect generated by the investigation process alone. In making the decision to file a petition, the firm considers the probabilities of a success petition, the payoffs associated with the success petition, and the cost of filling the petition. Only those firms that participate in the petition pay the significant legal cost associated with filling the petition. Therefore, firms are tempted to free-ride off other firms in the industry. Firms choose to participate in the petition because the expected amount of protection awarded increases as the number of firms participating increases. There may be multiple Nash equilibria. But the equilibrium with the most participating firms dominates all other equilibria. The author analyzes this point in chapter 5.Firms can also choose to withdraw a petition or continue the investing process. The AD petitions are used by domestic industries to induce foreign industries into collusive agreement. The ability to achieve a settlement is similar to litigants bargaining over an out-of-court settlement. Withdrawing a petition depends on two key factors: coordination cost and asymmetric information. Withdraw decreases with the coordination of both industries; under asymmetric information, both negotiated and antidumping outcomes are possible. This is analyzed in chapter 7.This paper analyzes the firms' behavior, not the industries'. In making models of filling, quantity and withdraw on part of firms, the paper finds the strategic motivations of firms under antidumping law. The antidumping determination is based on the outcome of firms behavior in the first stage, so the trade protection is endogenous with firms' behavior; the level of trade protection increase with the number of the firms anticipating the filling petition, so we find the factors influencing the decide of firms' filling; withdraw petition is the sign of international collution, the antidumping law is used by the domestic firms as a threat to the foreign firms. All these riche the research of antidumping.