发帖
雷达卡
Abstract
We examine an export game where two firms (home and foreign), located in two different
countries, produce vertically differentiated products. The foreign firm is the most efficient
in terms of R&D costs of quality development and the foreign country is relatively larger and
endowed with a relatively higher income. The unique (risk-dominant) Nash equilibrium involves
intra-industry trade where the foreign producer manufactures a good of higher quality than
the domestic firm. This equilibrium is characterized by unilateral dumping by the foreign
firm into the domestic economy. Two instruments of anti-dumping (AD) policy are examined,
namely, a price undertaking (PU) and an anti-dumping duty. We show that, when firms’ cost
asymmetries are low and countries differ substantially in size, a PU leads to a quality reversal
in the international market, which gives a rationale for the domestic government to enact AD
law. We also establish an equivalence result between the effects of an AD duty and a PU.
JEL Classification:
F12, F13Keywords:
anti-dumping duty, intra-industry trade, price undertaking, product quality,quality reversals
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