Review of Industrial Organization
14: 65–84, 1999.
1999 Kluwer Academic Publishers. Printed in the Netherlands.
The Effect of U.S. Antidumping Law on Firms’
Market Power: An Empirical Test
JAMES F. NIEBERDING
Cleveland State University, Dept. of Economics, E. 24th & Euclid Ave., Cleveland, OH 44115,
Abstract. An empirical version of the Lerner index is used to investigate the market power effects
of U.S. ﬁrms seeking protection under current antidumping law. The market power consequences are
examined for each of the three possible resolutions of an antidumping investigation: petition for relief
accepted (and duties levied), petition rejected, or petition withdrawn. For each outcome an industry
case study is presented and the market power analysis conducted. The results contained herein support
the hypothesis that U.S. ﬁrms receiving protection enhance their domestic market power, while ﬁrms
having their petition rejected experience a decrease in market power. The evidence is less clear for
plaintiffs who withdraw their antidumping petition prior to its ﬁnal resolution.
Key words: Dumping, antidumping law, market power, protectionism.
Commensurate with the multilateral tariff reductions that have occurred over the
last several decades, countries increasingly have sought relief from imports through
administered protection programs. Of these, the use of antidumping law constitutes
the most prevalent form of protectionism both in the U.S. and abroad.
such protection as being a remedy for the “unfair” actions of foreign ﬁrms. Under
this view, antidumping duties are seen as not being protectionist but rather as
being necessary to promote “fair” trade. Others, however, argue that such laws
assist domestic ﬁrms in obtaining import relief discreetly rather than through more
politically-visible means. Under this view the popularity of antidumping law is due
more to the rent-seeking behavior of domestic ﬁrms rather than to the unfair trading
practices of their foreign rivals, and the resulting diminution of foreign competition
allows for an increase in the market power of the protected ﬁrms resulting in
both allocative and productive inefﬁciencies. If supracompetitive beneﬁts accrue to
Nieberding, a visiting assistant professor at Cleveland State University, would like to thank two
anonymous referees for useful comments.
Antidumping laws are also the primary instrument of protection in the E.U., Canada, and
Australia (see Messerlin, 1991). Palmeter (1989), DeVault (1990), Prusa (1990, 1991, 1992), Boltuck
and Litan (1991), Bovard (1991), Anderson (1993), and McGee (1993) all discuss the popularity of
current U.S. antidumping law.