Antidumping with heterogeneous firms

Christian Gormsen (1, 2)

1 PSE - Paris School of Economics
2 CES - Centre d'économie de la Sorbonne

This paper analyzes anti¬dumping (AD) policies in a two-country model with heterogeneous firms. One country enforces AD so harshly that firms exporting to the country choose not to dump. In the short run, the country enforcing AD experiences reduced com¬petition to the benefit of local firm and detriment of local consum¬ers, but in the long run AD protection attracts new firms, increasing competition and consumer welfare. In the country's trading partner, competition initially increases: Some firms give up exporting, but those that remain will lower their domestic prices. Consumers there¬fore benefit in the short run. In the long run, however, fewer firms will enter the unprotected country, and competition will eventually decrease, resulting in welfare losses.

Mots clés: Trade policy; antidumping; monopolistic competition; hetero¬geneous firms

Domaines: Economies et finances

Christian Gormsen. Antidumping with heterogeneous firms. Économie Internationale, 2011, 125 (1), pp.41-64. ⟨hal-00663024⟩