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Universal Dumping of Homogeneous Products
Author(s) -
Murray Tracy,
Turdaliev Nurlan
Publication year - 1999
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00183
Subject(s) - dumping , homogeneous , imperfect competition , economics , outcome (game theory) , imperfect , competition (biology) , international trade , reciprocal , microeconomics , international economics , biology , thermodynamics , ecology , linguistics , philosophy , physics
Contrary to predictions from traditional comparative advantage analysis, a class of models with imperfect competition predicts intra‐industry trade in homogeneous goods. Brander and Krugman offer a model with two countries and one firm in each country which generates the outcome that both firms dump into the export market (reciprocal dumping). The present paper determines the extent to which higher dimensionality alters this outcome by introducing a model with several firms in each of several countries. It is shown that dumping is universal. Thus, whenever trade occurs dumping occurs.