Antidumping as Strategic Trade Policy Under Asymmetric Information

39 Pages Posted: 6 Feb 2009

See all articles by Xenia Matschke

Xenia Matschke

University of California, Santa Cruz

Anja Schöttner

Humboldt University of Berlin - School of Business and Economics

Date Written: February 1, 2009

Abstract

This paper investigates the domestic government's antidumping duty choice in an asymmetric information framework where the foreign firm's cost is observed by the domestic firm, but not by the government. To induce truthful revelation, the government can design a tariff schedule, contingent on firms' cost reports, accompanied by a threat of auditing and implementing penalty duties. We show that the antidumping framework within GATT/WTO may not only offer the means to pursue strategic trade policy disguised as fair trade policy, but may also help overcome the informational problems with regard to determining the optimal strategic trade policy.

Keywords: antidumping duties, asymmetric information, trade protection, strategic trade policy

JEL Classification: F12, F13

Suggested Citation

Matschke, Xenia and Schöttner, Anja, Antidumping as Strategic Trade Policy Under Asymmetric Information (February 1, 2009). CESifo Working Paper Series No. 2536, Available at SSRN: https://ssrn.com/abstract=1338048

Xenia Matschke (Contact Author)

University of California, Santa Cruz ( email )

1156 High St
Santa Cruz, CA 95064
United States

Anja Schöttner

Humboldt University of Berlin - School of Business and Economics ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

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