Anti-Dumping and Product Quality

Abstract

We examine Chinese firms' decisions on export product quality in the face of product- and market-specific tariff shocks that arise when importers impose anti-dumping (AD) duties. Using time-varying trade policy changes from the Global Anti-dumping Database and transaction-level Chinese customs data between 2000 and 2015, we find that Chinese firms hit by AD duties tend to reduce the quality of the targeted products. We show that the results are robust to several sensitivity checks. The estimated impact of quality downgrading persists even after the measure is revoked.  In particular, our estimates are larger for firms exporting to developing countries, for  higher-quality products, and for core products. In addition, firms exposed to AD duties respond by importing lower-priced input varieties. These results are consistent with several models in the trade literature. Back-of-the-envelope calculations show that countries imposing AD measures experience a 5.4% loss in  consumer surplus for the targeted products.

Keywords: anti-dumping, China, trade, quality, imported inputs