GEP Research Paper 06/28
Antidumping Regulation and the Byrd Amendment: Does Revenue Redistribution Reduce Dumping?
Rod Falvey and Sarut Wittayarungruangsri
Abstract
While the brief experiment with redistributing antidumping duty revenue to import competing firms (via the Byrd Amendment) will soon be over, interest remains in how such a mechanism affects the strategic incentives of the firms involved. In this paper we use a simple two-period duopoly model where two countries differ only in market size to evaluate these incentives. An antidumping law provides an incentive for both firms to adjust sales so as to shift the dumping margin in their favor, and revenue redistribution strengthens this incentive for the filing firm. The outcome is that dumping is more prevalent and that the dumping margin is larger, except in some cases where the duty would otherwise be prohibitive. The profits of the filing firm are generally, but not always, higher, and the profits of the dumper are generally, but not always, lower. Consumers gain in one country and lose in the other, with the gainers and losers depending on the market size difference.
Issued in September 2006.
This paper is available in PDF format .