Dumping Behavior and
Anti-Dumping Laws
in an Infinite Horizon
International Duopoly Model
By
Yutaka Suzuki¨
Abstract
We
present an infinite-horizon international-duopoly model, with the assumption
that current output choices affect the probability of anti-dumping enforcement
and the magnitude of anti-dumping duties, and examine both exporting and
importing firms’ dynamic behavior. We solve for a Markov-perfect (a
Closed-Loop) equilibrium, where the state variable is anti-dumping penalty in
effect during a given period, and a strategic effect is also considered. We
show that equilibrium dumping still exists even under the threat of
anti-dumping duties, that it is compatible with price-equalization under
Closed-Loop regime, but not under Open-Loop one, and that it can increase
social welfares for both countries.
JEL classification numbers F13, L13.
Key Words. Dynamic duopoly, dumping, anti-dumping laws, Markov Perfect
Equilibrium,
strategic
effect.
¨ Name: Yutaka Suzuki
Address: Department of Economics, Stanford University (Visiting
Scholar from April 2001). Stanford, CA 94305-6072, U.S.A.
E-mail Address: yusuzuki@stanford.edu
and yutaka@mt.tama.hosei.ac.jp