Export uncertainty in centrally planned economies and administered protection

Abstract

The paper examines the price decision making process of a state foreign trade organization under threat of antidumping tariffs. Given the peculiar application of the antidumping law to centrally planned economy exporters, the paper formally outlines the parameters guiding the state exporter's price decision and attempts to estimate the degree of uncertainty it faces. The exporter's optimal price is shown to depend on its subjective probability distributions of numerous foreign prices and alternative methodologies for calculating a centrally planned economy exporter's “fair price.”