This paper investigates the domestic government's antidumping duty choice in an asymmetric information framework where the foreign firm's cost is observed by the domestic firm, but not by the government. To induce truthful revelation, the government can design a tariff schedule, contingent on firms' cost reports, accompanied by a threat of auditing and implementing penalty duties. We show that the antidumping framework within GATT/WTO may not only offer the means to pursue strategic trade policy disguised as fair trade policy, but may also help overcome the informational problems with regard to determining the optimal strategic trade policy.

This paper is ... interested in the pricing behavior of exporting firms and their responses to variations in costs and trade barriers. In doing so, we pay particular attention to anti-dumping duties and their special place among other geographical and trade barriers. ... Unlike the case of tariffs or countervailing duties, the implementation of anti-dumping measure is directly contingent on the prices of imports. Therefore the manner in which anti-dumping duties affect decisions of price-setting firms is different from that of any other trade barriers. That was pointed out by Marston (1990) and Blongen and Haynes (2002) but so far proper theoretical analysis of this trade policy instrument has been lacking. ... This paper aims to fill this gap by developing a simple pricing-to-market model in a linear demand specification. We show that the pass-through of anti-dumping duties is fundamentally different from that of tariffs, costs, or exchange rates. This theoretical notion is then supported by the empirical evidence. ... Proper understanding of the anti-dumping duty pass-through mechanism helps improve the accuracy of trade policies and the analysis of their welfare implications.

This paper explores the role of information in the formulation of trade policy for home and foreign country, in a setting in which the home government chooses its subsidy level first after which the foreign firm retaliates by imposing tariffs on its imports. We consider an environment in which home firm costs are private information but it can signal these costs to both policymakers and the foreign firm by choosing the appropriate output level. We show that a low-cost home firm has an incentive to misrepresent itself as high-cost. This is understood by the foreign firm and both policymakers and results in the home government setting a higher subsidy in the signalling case compared to the case when the home firm's output was not a signal of its costs; the foreign government sets the same tariff in both cases. -- Export subsidy ; Tariffs ; Incomplete information ; Signalling

Presently, the U.S. stands alone in opposing meaningful reform-an untenable position. In this book, the authors explain how these insidious rules have endured, and why and how to promote a successful antidumping reform strategy.

With the virtual elimination of tariffs and quotas under GATT, antidumping measures emerged as a key instrument of protection. Under antidumping actions exporters can either raise the price to eliminate the dumping margin or pay an antidumping duty. This paper analyzes the incentives to exporters to choose between duty or settlement outcomes and finds that due to the smaller loss in market share exporters may prefer an antidumping duty over voluntary settlement. The paper analyzes the welfare implications of these outcomes and finds that they are ambiguous.

The slow pace of the Doha Round has boosted the proliferation of regional and bilateral trade agreements. Paradoxically, the more powerful actors, the US and the European Union, who at the same time have benefited the most from the multilateral system, have also been engaged in bilateral and regional negotiations in order to sign WTO-plus agreements with developing countries. Combining a clear theoretical exposition with systematic cross-regional analysis, 'Asymmetric Trade Negotiations' offers a coherent picture of strategic, design and political economy aspects of North-South trade negotiation processes, from African, Asian and Latin American perspectives. Skilled area specialists gather to provide negotiators and policy makers in the South with recommendations, best practices, and benchmarks and contribute to the understanding of these recent processes.