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Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence

Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence Antidumping (AD) trade protection policies allow government agencies to recalculate AD duties based on foreign firms' most recent pricing behavior. We examine the resulting dynamic pricing problem of a foreign firm facing such policy. We show that the expected pattern of AD duty recalculations over time crucially depends on the foreign firm's ex ante expectations of possible outcomes of AD policy enforcement. Our empirical analysis then confirms the role of ex ante expectations in explaining observed patterns of AD recalculations. Many of our model's results are applicable to other situations where enforcement of policy is tied to the subject's behavior. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

Dynamic Pricing in the Presence of Antidumping Policy: Theory and Evidence

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References (31)

Publisher
American Economic Association
Copyright
Copyright © 2004 by the American Economic Association
Subject
Articles
ISSN
0002-8282
DOI
10.1257/000282804322970742
Publisher site
See Article on Publisher Site

Abstract

Antidumping (AD) trade protection policies allow government agencies to recalculate AD duties based on foreign firms' most recent pricing behavior. We examine the resulting dynamic pricing problem of a foreign firm facing such policy. We show that the expected pattern of AD duty recalculations over time crucially depends on the foreign firm's ex ante expectations of possible outcomes of AD policy enforcement. Our empirical analysis then confirms the role of ex ante expectations in explaining observed patterns of AD recalculations. Many of our model's results are applicable to other situations where enforcement of policy is tied to the subject's behavior.

Journal

American Economic ReviewAmerican Economic Association

Published: Mar 1, 2004

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