Antidumping Regulation and the Byrd Amendment: Does Revenue Redistribution Dissuade Dumping?

Abstract

The Byrd Amendment, which redistributed antidumping duty revenue to import competing firms, has been declared an unauthorized “action against dumping”. But does revenue redistribution dissuade dumping? Or is it a strategic trade policy? This paper uses a simple two-period duopoly model to evaluate these issues. 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. It is found that dumping is generally more prevalent and the dumping margin is larger with revenue redistribution, as a consequence. The profits of the filing (dumping) firm are generally, but not always, higher (lower). Consumers gain in one country and lose in the other, with the gainers and losers depending on the market size difference.