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An Antidumping Law Can Be procompetitive
Author(s) -
Hartigan James C.
Publication year - 2000
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.00086
Subject(s) - collusion , dumping , economics , incentive , competition (biology) , competition law , punishment (psychology) , microeconomics , international economics , monopoly , psychology , ecology , social psychology , biology
Home and foreign duopolists collude in the absence of an antidumping (AD) law because competition law makes renegotiation of collusion more costly than imposition of punishment for defection. Introduction of an AD law with a weak injury standard can undermine collusion by providing a low‐cost mechanism for renegotiation. This induces dumping by the foreign firm and defection by the home firm. An AD law can be procompetitive, in contrast to recent literature suggesting that an AD law can facilitate collusion. The law is asymmetric, providing a greater incentive for home‐firm than foreign‐firm deviation.