Reports
Discussion Papers
No.611 Preferential trade agreements and antidumping actions against members and nonmembers
by Hiroshi Mukunoki
July 2016
ABSTRACT
In a three-country oligopoly model, this paper analyzes a country's decisions concerning antidumping (AD) action against two foreign countries and the relationship between those decisions and regional trade agreements (RTAs). An RTA intensifies product-market competition in the markets of member countries and lowers product prices, while it raises export prices of goods subject to tariff reductions. This effect widens the dumping margin of the non-member firm and narrows the dumping margin of the member firm. If the government is more concerned with domestic firm profit in its AD decision, the RTA may invoke the member's AD action against the nonmember. If the governments attach a sufficiently high value on social welfare, however, the RTA may promote the AD action against the member. If the governments' weight on the domestic firm's profit is neither high nor low, an RTA may block the AD actions against both countries.
Keywords: preferential trade liberalization, antidumping, international oligopoly
JEL classification: F12, F13, F15, L13
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