The Economic Effects of Widespread Application of Anti-dumping Duties to Import Pricing

The Economic Effects of Widespread Application of Anti-dumping Duties to Import Pricing

We provide an analysis of the implications of widespread use of anti-dumping (AD) duties to welfare and sectoral resource allocation in the context of a computable general equilibrium model of trade among three open economies. Production of the dumped good has a decreasing-cost technology, thus allowing the endogeneity of the number of firms in the home and foreign markets. AD duties in this general-equilibrium framework have the protective effects of the tariffs they are; the economies have the dual distortion of the original dumping and the imposed tariff AD duties only promote free trade when they are effective in deterring anti-dumping duty. Firm entry in the dumping country or removal of transshipment restrictions are more effective anti-dumping policies than the AD duty.