Abstract
Utilizing four-dimensional (firm-product-destination-year) Brazilian firm-level export data, we show that antidumping (AD) duties result in a significant and dramatic increase in the unit values of the products that firms export to duty-imposing countries. Furthermore, we examine the effect of potential (retaliatory) AD duties on the unit price of the firms' shipments. Our findings suggest that AD activities in Brazil lead Brazilian exporting firms to increase their unit export prices for the named industries' products to decrease the dumping margin and avoid the threat of retaliation by the target countries.
Highlights
Utilizing four-dimensional Brazilian firm-level export data, we show that antidumping (AD) duties result in a significant and dramatic increase in the unit values of the products that firms export to duty-imposing countries
When an AD petition is filed by domestic industries and exporters’ flexibility to price discriminate between the home and target countries is restrained because of the threat of retaliation, we expect the exporting firms to respond by increasing the prices of their shipments to the target country to reduce the dumping margin and avoid that threat
After the inception of the World Trade Organization (WTO) in 1995 and the dramatic tariff cuts that countries experienced, the importance of AD duties increased for firms that seek alternative instruments of protection
Summary
Utilizing four-dimensional (firm-product-destination-year) Brazilian firm-level export data, we show that antidumping (AD) duties result in a significant and dramatic increase in the unit values of the products that firms export to duty-imposing countries. Prusa (1992) focuses on how AD cases might lead to collusion between domestic and foreign firms We contribute to this literature through the innovative use of four-dimensional customs data (firms, products, destinations, and years) to determine the effects of AD duties and the threat of their enforcement on export prices. One proposed explanation is that countries tend to retaliate against countries by which they were previously targeted in AD investigations (Miranda et al 1998; Prusa and Skeath 2002; Francois and Niels 2004; Feinberg and Reynolds 2006) These studies suggest that this tit-for-tat strategy in AD actions has created an “AD club,” which consists of countries that have implemented and actively utilize AD law. Concentrating on AD activity in the United States, these authors show that the risk of a potential reaction
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