Studies of antidumping policy

This thesis consists of four chapters. The first chapter is a brief introduction and summary of the thesis and the rest three chapters are independent studies of antidumping policy. Chapter 2 studies how antidumping policy affects firms' incentives to innovate in a model of reciprocal dumping extended to a two-stage game, in which two firms first invest in R&D and then compete in two national markets. It finds that, when a single government institutes antidumping law, the protected firm decreases its R&D efforts while the constrained firm increases its own. However, when both governments engage in antidumping actions, the both firms invest more in R&D than under free trade. Chapter 3 is a complement to chapter 2. The analysis in chapter 2 assumes that R&D investment brings in deterministic cost reduction. Chapter 3 relaxes this assumption and assumes that R&D is a risky process in that the date of innovation is uncertain. Conclusions in chapter 3 are similar to those in chapter 2, except for the protected firm when a single country institutes antidumping policy. The unilaterally protected firm may also invest more in R&D than under free trade since it's more costly to lose out in the R&D competition under protection. Chapter 4 is an empirical study of antidumping. Using data of all publicly traded American steel companies from 1985 to 1997, it compares the growth rate of firms' productivity and their profitability level under antidumping (AD) duty protection and under voluntary export restraint (VER) protection. One of the major findings is that the growth rate of large firms' productivity increases under AD duty protection while that of small firms doesn't change. In addition, firms' profitability level is not affected by changes in protection instruments. These findings largely confirm the widely accepted notion that tariff as a protection instrument is preferable to quota.