Production Effects of Price- and Cost-Based Anti-Dumping Laws under Flexible Exchange Rates

Abstract

This paper investigates the production response of an exporting firm when faced with the threat of an anti-dumping (AD) action. The firm's production decision is sensitive to market conditions at home and abroad, as well as to the definition of dumping. We examine the incentives facing the exporting firm under price-based, marginal-cost-based, and average total cost-based anti-dumping laws. Depending on the nature of the anti-dumping rules and market conditions, a firm's production may rise, fall, or remain unchanged in response to AD legislation. Les effets de production des lois anti-dumping fondees sur les prix et sur les couts dans un