Dumping and international market power in vertically related industries

This dissertation investigates, theoretically and empirically, the cause and exercise of dumping and international market power in vertically related industries.; Chapter two develops a model of price dumping in which dumping behavior in intermediate goods is explained by country-specific final good production costs. Specifically, a foreign intermediate good supplier will dump into its export market if its export customers are less efficient than its domestic customers. An anti-dumping duty has two effects on global welfare: a loss from reduced final good production and a contrasting gain from producing the lower final good output more efficiently.; The third chapter investigates the inter-relationship between vertical integration and international predation. We construct a simple two-period model which builds on the modern "deep pocket" theory of predation. If there exist international asymmetries in vertical integration, due to differences in national competition policies, vertical integration is shown to function as a cause of and a deterrent to foreign predatory behavior.; Chapter four tests the hypotheses, proposed in the previous chapter, that vertical integration can function as a "cause of" and a "deterrent to" foreign predatory behavior. Data from anti-dumping investigations are taken as indicators of predation. The "cause of" hypothesis is tested in a cross-country analysis, in which we apply an economy-wide measure of vertical integration. The "deterrent to" hypothesis is investigated in cross-industry studies for which we propose a new indicator of vertical integration, based on the intensity of intra-firm trade flows of multinationals. Our findings provide some evidence for both hypotheses.; Chapter five analyzes the relationship between vertical integration and market power in a historical comparison of the US and German petrochemical industries after World War II. A simple cross-product analysis indicates that the degree of concentration of petrochemical end products is significantly correlated to a measure of the degree of vertical supply in the market. A cross-national study of entrance behavior in petrochemicals indicates that the infrequent entrance in the German industry relative to the US industry can be explained by the higher degree of vertical integration in the German industry.