Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94272
Authors: 
Prusa, Thomas J.
Kolev, Dobrin
Year of Publication: 
1999
Series/Report no.: 
Working Papers, Department of Economics, Rutgers, The State University of New Jersey 1999-01
Abstract: 
We argue that the rise of antidumping protection and the proliferation of voluntary export restraints are fundamentally inter-related. We show that both can be explained by a cost-based definition of dumping when the domestic government has incomplete information about the foreign firm's costs. Given that its costs are only imperfectly observed and knowing the government's desire to offer greater protection against competitively priced imports, efficient foreign firms will voluntarily restrains their exports prior to the antidumping investigation. In turn, the VER distorts the government's perception of the foreign firm's efficiency and often leads to undesirably high duties regardless of the foreign firm's efficiency. The clumsy way that duties are levied benefits domestic firms, which explains the popularity of cost-based complaints.
Subjects: 
Antidumping law
Incomplete information
Voluntary export restraints
JEL: 
D82
F13
L13
Document Type: 
Working Paper

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