Firm's behavior in the presence of antidumping laws

摘要: Dumping and antidumping are among the prominent issues in trade negotiations these days. All economists agree that any barrier to free flow of goods countries world is welfare reducing. However, proponents laws claim not meant limit but promote fair trade, therefore, if laissez-faire environments, which this case implies dumping does occur absence law, introduction should matter;The definition commonly used cases considered have occurred price charged by a firm foreign market inclusive transportation costs lower than charges for same product domestic market. In circumstances law recommends tariff, some proportion difference two prices, be imposed on imports. We use best response curves simple duopoly model analyze effects laws. show type tariff rule gives an edge home (importing) over (exporting) creates non-concavity firm's profit function, causes jumps its curve. While solving we multiple local solutions may exist due unique structure When hard characterize analytically, numeric simulation. simulate situation where, take place equilibrium. introduced situation, emerge regions where actually binding firm;Intuitively, one expects would affect decisions firms both importing exporting situation. demonstrate presence can lead modify their behavior.