Hylke Vandenbussche

European anti-dumping policy and the profitability of national and international collusion

This paper is the first to study the effect of European Anti-dumping policy on market structure, i.e., the incentives of firms to engage in a domestic or international cartel in a multi-stage setting. The analysis concentrates on how European anti-dumping policy influences the incentives for firms to collude domestically or internationally. We tackle the question of whether anti-dumping regulation helps to establish, maintain or endanger full international cartels as well as cartels restricted to domestic firms only. Our findings suggest that European anti-dumping legislation can have both a pro-competitive and an anti-competitive effect. Which effect prevails depends crucially on the welfare objective function used by the European government and also on the cost-asymmetry and the degree of product heterogeneity between domestic and foreign firms. In addition to market structure, we also discuss welfare effects. We find that anti-dumping measures are capable of both increasing and decreasing total European Community welfare, depending on the type of measures installed.

Inflicting injury through product quality: how European antidumping policy disadvantages European producers

In this paper, we show how an industry characterized by vertical product differentiation may be affected by European antidumping policy. Using a two-stage model where quality choice is determined before price competition takes place, we show that EU antidumping policy that takes the form of price-undertakings protects domestic firms at the price competition stage, but is disadvantageous to domestic firms once the effect on quality choice is taken into account. European antidumping policies may therefore disadvantage European producers through reversals of quality ranking.

Antidumping duties, undertakings, and foreign direct investment in the EU

We study the effects of EU antidumping policy when foreign firms can ‘jump’ antidumping duties through foreign direct investment (FDI) in the EU. We show that duty jumping or duty pre-empting FDI occurs if the EU administration has broader objectives than protecting EU industrys profitability and if cost advantages of foreign firms are transferable abroad. The (expectation of) price undertakings reduces the incentives to engage in FDI and may even discourage FDI as long as products are not too differentiated. The results are consistent with recent empirical findings on antidumping jumping FDI.

Trade Policy Versus Competition Policy: Substitutes or Complements?

This paper deals with the difference between trade policy and competition policy for domestic prices, wages, and employment when product and labour markets are imperfectly competitive. We show that in the presence of country-specific institutions like trade unions, trade policy and competition policy are no longer substitutes in disciplining product and labour market distortions. While both domestic entry and foreign imports affect domestic price-cost margins, they differ in their effectiveness and their impact on the domestic labour market. The results in this paper suggest that enforcement of competition policy without a sufficient degree of openness to imports is typically not a first-best outcome. While domestic entry increases union welfare, foreign imports reduce it. Competition policy in the presence of labour unions is insufficient to reduce labour market distortions, while international competition reduces both labour and product distortions.

Accounting for Stylised Facts About Recent Anti‐Dumping: Retaliation and Innovation

Recent work has found certain stylised facts about anti‐dumping (AD) actions. (i) AD actions are mostly between industrial and developing countries; (ii) developing countries use AD to retaliate against industrial countries; and (iii) AD is concentrated in R&D‐intensive industries. This study develops an analytical framework that can account for these empirical findings. The model suggests that market expansions and/or improvement in R&D capability in the South are essential in avoiding AD wars with the North. Interestingly, stricter enforcement of intellectual property rights in the South has little effect on stopping AD wars between the North and the South.