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

Posted: 24 May 2001

See all articles by Thusnelda Tivig

Thusnelda Tivig

University of Rostock

Uwe Walz

Goethe University Frankfurt - Institute of Economics; Center For Financial Studies (CFS); Leibniz Institute for Financial Research SAFE

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.

JEL Classification: F12, F13

Suggested Citation

Tivig, Thusnelda and Walz, Uwe, Market Share, Cost-Based Dumping, and Anti-Dumping Policy. Available at SSRN: https://ssrn.com/abstract=238643

Thusnelda Tivig (Contact Author)

University of Rostock ( email )

Postfach 10 08 88
Rostock, 18055
Germany
++49-381-498-4465 (Phone)
++49-381-498-4467 (Fax)

Uwe Walz

Goethe University Frankfurt - Institute of Economics ( email )

Postfach 81
D-60054 Frankfurt
Germany

Center For Financial Studies (CFS) ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

Leibniz Institute for Financial Research SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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