Under the Cover of Antidumping: Does Administered Protection Facilitate Domestic Collusion?

Abstract

Anecdotal evidence suggests that domestic firms can use the antidumping petition process to engage in collusion and increase domestic prices. In this paper, I test whether the antidumping petition process itself can help domestic firms raise prices. I propose a method to identify whether firms in the industry experience a structural break in the level of market power possessed by the firms at the time that they file their antidumping petition. I use this methodology to analyze the impact of antidumping petitions on competition levels in two industries. I find little evidence that either of these industries increased their market power following the filing of petitions for trade relief, nor even from the protection that resulted from these petitions. These findings suggest that the widespread belief that antidumping leads to more market power may not always hold.