Antidumping, Antitrust, and Competition
20/07/2010 12:00
Constantin Colonescu
Abstract
This work develops a two-country, two-firm model of imperfect competition to show
that antitrust policy may be anticompetitive both at home and abroad. Antidumping has a procompetitive effect abroad. At home antidumping is anticompetitive in a static framework but procompetitive in a repeated game. The anticompetitive effect of antidumping is shown to be enhanced by the presence of a domestic antitrust policy. If trade and antitrust policies are co-ordinated, welfare is found to be more sensitive to antitrust than to antidumping. Hence, antidumping and antitrust are imperfect substitutes.
Abstract
This work develops a two-country, two-firm model of imperfect competition to show
that antitrust policy may be anticompetitive both at home and abroad. Antidumping has a procompetitive effect abroad. At home antidumping is anticompetitive in a static framework but procompetitive in a repeated game. The anticompetitive effect of antidumping is shown to be enhanced by the presence of a domestic antitrust policy. If trade and antitrust policies are co-ordinated, welfare is found to be more sensitive to antitrust than to antidumping. Hence, antidumping and antitrust are imperfect substitutes.
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