Faculty of Economics and Business Administration Publications Database

Market Share, Cost-Based Dumping, and Anti-dumping Policy

Tivig, Thusnelda
Volume: 33
Number: 1
Pages: 69 - 86
Month: February
ISSN-Print: 0008-4085
Link External Source: Online Version
Year: 2000
Keywords: Dumping; Consumer goods; Commercial policy
Abstract: This paper studies the occurrence of dumping and the implications of anti-dumping duties in a deterministic price-setting two-period duopoly model for differentiated products. When current market shares matter for future demand, cost-based dumping can be profitable.Dumping thus arises as a form of investment in market shares. This might trigger the application of anti-dumping law. We further show that correctly anticipated duties do not necessarily hinder firms from selling below costs. The mere existence of anti-dumping law, however, significantly changes the structure of the game, leading to higher first-period prices for both firms.