57 Pages Posted: 30 Jul 2014
Date Written: July 2014
This paper examines the determinants of “echoing” in antidumping (AD) cases (i.e., different countries sequentially imposing AD measures on the same product from the same exporter). We develop a dynamic game in which two competing importers can choose to impose an AD duty on a third exporting country in one of two periods, if at all. Assuming that governments are politically motivated (favoring their import competing industries), we find that a country imposes an AD duty in the first (second) period independently of the other country’s actions if its political-economy parameter is “very high” (“high”). Instead, it never introduces AD measures when its political economy parameter is below a critical “low” threshold. Echoing occurs for intermediate values of the political-economy parameter: a country chooses to impose an AD duty in the second period if and only if the competing importer has done so in the first period. Using a novel AD dataset, we document that echoing is a common practice among both traditional and new users of AD. In line with the conclusions of the theoretical model, the econometric results show that AD measures are more likely to be introduced in response to other countries’ measures when governments care to some extent, but not too much, about their import-competing industries. Thus, this paper shows that countries’ political-economy-driven trade policies are interdependent and should not be analyzed in isolation.
Keywords: Antidumping; political economy of trade protection
JEL Classification: F12, F13, F14
Suggested Citation: Suggested Citation