Premium
Are government or private enterprises more likely to engage in dumping? Some international evidence
Author(s) -
Lott John R.
Publication year - 1995
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090160302
Subject(s) - nonmarket forces , dumping , economics , profit maximization , politics , government (linguistics) , revenue , public economics , profit (economics) , market economy , microeconomics , finance , factor market , linguistics , philosophy , political science , law
This paper provides the first systematic evidence comparing the incidence of below‐cost dumping among state and privately owned firms. Recent economic theory indicates that government enterprises, if motivated by goals such as output or revenue maximization rather than profit maximization, face higher returns to engaging in below‐cost pricing than private enterprises. International data from anti‐dumping investigations strongly confirm this prediction. Between 43% and 94% of initiated below‐cost dumping cases and between 54% and 100% of affirmative dumping decisions against exporting firms from nonmarket economies are attributable to those firms' publicly owned status. We are able to reject the hypotheses that this result is explained by political biases against nonmarket economies in anti‐dumping procedures or from possible political biases stemming from the industry composition of nonmarket exports. In fact in both cases, we find that the above results may understate the true effect of market organization on a country's propensity to engage in dumping.