Self-Protection: Antidumping Duties, Collusion and FDI
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Date
2003-11
Authors
Davies, Ronald B.
Liebman, Benjamin H., 1971-
Journal Title
Journal ISSN
Volume Title
Publisher
University of Oregon, Dept. of Economics
Abstract
It is well established that the threat of antidumping duties can help sustain collusion between a foreign firm and its domestic counterpart. However, when the foreign firm is a multinational, its subsidiary will fight against a new duty, potentially making this threat hollow and collusion less likely. We show that the multinational may therefore choose to submit to a tariff even under collusion since evidence indicates that duties are more difficult to remove than initiate. In this way, it is possible to obtain a greater degree of commitment, although it comes at a cost. Nevertheless, we show that this can be a more profitable strategy than those previously explored. In fact, we find several cases where subsidiaries of multinational firms have indeed filed for protection from their own parents.
Description
21 p.
Keywords
Antidumping, Collusion, Foreign direct investment