Antidumping, Intra‐Industry Trade, and Quality Reversals

27 Pages Posted: 31 Jul 2015

See all articles by José L. Moraga-González

José L. Moraga-González

VU University Amsterdam; University of Groningen

Jean-Marie Viaene

Erasmus University

Date Written: August 2015

Abstract

We examine an export game where two (home and foreign) firms produce vertically differentiated products. The foreign firm is more R&D efficient and is based in a larger and richer market. The unique (risk‐dominant) Nash equilibrium exhibits intra‐industry trade, and the foreign producer manufactures a higher‐quality product. When transport costs are low, unilateral dumping by the foreign firm arises; otherwise, reciprocal dumping occurs. For some parameters, a domestic antidumping policy leads to a quality reversal in the international market whereby the home firm becomes the quality leader. This policy is desirable for the implementing country, though world welfare decreases.

Suggested Citation

Moraga-Gonzalez, Jose Luis and Viaene, Jean-Marie, Antidumping, Intra‐Industry Trade, and Quality Reversals (August 2015). International Economic Review, Vol. 56, Issue 3, pp. 777-803, 2015, Available at SSRN: https://ssrn.com/abstract=2638127 or http://dx.doi.org/10.1111/iere.12122

Jose Luis Moraga-Gonzalez (Contact Author)

VU University Amsterdam ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands

HOME PAGE: http://www.tinbergen.nl/~moraga/

University of Groningen

P.O. Box 800
9700 AV Groningen, Groningen 9700 AV
Netherlands

Jean-Marie Viaene

Erasmus University ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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