1 / 17

Anti-Dumping with Heterogeneous Firms: New Protectionism for the New-New Trade Theory

Anti-Dumping with Heterogeneous Firms: New Protectionism for the New-New Trade Theory. Christian Gormsen Schmidt, Aarhus School of Business, GlobID Research Group. Presentation plan: Research question Background: Anti-dumping literature The model The anti-dumping equilibrium Results

katriel
Télécharger la présentation

Anti-Dumping with Heterogeneous Firms: New Protectionism for the New-New Trade Theory

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Anti-Dumping with Heterogeneous Firms: New Protectionism for the New-New Trade Theory Christian Gormsen Schmidt, Aarhus School of Business, GlobID Research Group

  2. Presentation plan: • Research question • Background: Anti-dumping literature • The model • The anti-dumping equilibrium • Results • Conclusion Research Question • Accelerating use of anti-dumping legislation, worldwide. • Theoretical advancement with the introduction of heterogeneous firms. • How does anti-dumping affect • Firm selection (exiters, domestic-only, exporters) • Entry patterns • New motivations for anti-dumping legislation? • Method: Two-country model, (Home, Foreign) one country (Foreign) has anti-dumping legislation ‘Tough’ use of legislation Anti-Dumping with Heterogeneous Firms: New Protectionism for the New-New Trade Theory Christian Gormsen Schmidt, Aarhus School of Business

  3. Presentation plan: • Research question • Background: Anti-dumping literature • The model • The anti-dumping equilibrium • Results • Conclusion My findings (all theoretical) Firms and industry: • Domestic Distortion in ‘the other country’, Home • Firm selection affected • Dramatically fewer exporters in Home • Firm Entry in H decreasesFirm Entry in “anti-dumping regime” (F) increases • Policy • Anti-dumping similar (but not identical) to unilateral trade restriction. • Enforcing anti-dumping attracts variety-producing firms • and gives large increase in net exports of varieties • Long run Welfare gains • Beggar thy neighbor, but less than unilateral trade restriction

  4. Presentation plan: • Research question • Background: Anti-dumping literature • The model • The anti-dumping equilibrium • Results • Conclusion The anti-dumping literature: • Policy-related empirical studies Adoption and interpretation of anti-dumping legislation.Prusa (2005), Vandenbussche and Zanardi (2008), Blonigen (2006a) • Partial equilibrium models, firm level • Firm’s strategic use/response (pricing, collusion)Prusa (1994), Reitzes (1993), Prusa (1992), Vandenbussche and Veugelers (1999) • Empirical studies of firm’s filing and price responses Blonigen and Haynes (2002), Staiger and Wollak (1994) • Economy-wide effects, estimations • CGE modeling, the USBlonigen Gallaway and Flynn (1999) • Gravity equations with anti-dumping var.s as regressorsVandenbussche and Zanardi (2006)

  5. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion Firm heterogeneity • Heterogeneous firms in monopolistic competition models, Melitz (2003) • My baseline: Melitz and Ottaviano (2008) • Two-country version, Home (H) and Foreign (F)(superscript l and h) • Quadratic preferences, linear demands • Ll consumers (l = H, F) • Fixed costs of entry, fE, no fixed cost of producing nor of exporting • Marginal cost lottery, draw from G(c) (pareto) • Trade cost: country-specific iceberg cost t l > 1 • Non-strategic firms

  6. p p Export markethMarginal export cost:t hc, t h > 1 Domestic marketl Firm draws marginal cost c c > cDl, exit cDl cD h c > cXldomestic only c < cDl, produce cXl = cDh/t h c < cXlexport D-1 D-1 q q Survival selection in Melitz and Ottaviano (2008) Export selection in Melitz and Ottaviano (2008) Firm selection, cost cutoffs

  7. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion The open economy equilibrium • Domestic and export prices: • Domestic cutoff summarizes ‘competitiveness’ of industry • Zero expected profits of entry, determines domestic cutoffs • Domestic cutoff then determines • Average prices (proportional) • Number of varieties for consumers, Nl • Number of entrants, from: • Welfare: Higher with lower cutoff

  8. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion The role of trade barriers • Bilateral trade liberalization:Bilaterally decreasing t’s increases welfare • Unilateral trade restriction:Unilaterally increasing t l increases welfare in l, reduces welfare in h • Induces more entry in l

  9. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion The anti-dumping equilibrium • The model has reciprocal dumping: • Anti-dumping authorities deduct trade costs: • Sufficient to conclude that dumping occurs • The analyzed anti-dumping equilibrium: • Asymmetric, only Foreign has anti-dumping legislation • All Home exporters decide not to dump • In equilibrium, no anti-dumping petition filed • Interpretations: • Policy evalution: This is the goal of anti-dumping legislation • Outcome in industry with ‘history of intense anti-dumping’ • Asymmetric in order to highlight effects on trading partner

  10. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion Constrained prices, Domestic distortion • Home exporter constrained: • Prices: • “Optimal domestic distortion”, weight b H [0,1] • My results are consequences of new pricing rule • GE effects (when cutoffs determined by free entry condition) • ‘pre-GE’ effects • Prices lowered on domestic market, domestic quantity increased

  11. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion Export or stop exporting? • Reduced profits for Home exporter • Deadweight loss decreased in Home, increased in Foreign • Costly to export: • Export only profitable if: • New, lower, export cutoff • Altered zero expected profit condition, • Entry in Home less attractive, • leads to GE consequences

  12. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion GE Effects in Home (simulation) (p1) • Firm selection: • Domestic competition reduced, cDHincreases. • Export propensity in Home dramatically lower • Due to reduced Entry • Harder to export  Entry less attractive • Less varieties • … and shift towards imported varieties • Prices: • Average price: Net decrease • Exported goods cheaper, but less competition • Price variance increases (cheaper exportes)

  13. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion GE Effects in Home (simulation) (p2) • Welfare loss • Less varieties, higher average price • Softened: Substitution towards varieties from Home exporters • Under strong asymmetries: if t H >>t F and LH >> LF Softening may dominate.

  14. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion GE Effects in Foreign (simulation) (p1) • Firm selection: • Domestic competition increases, cDF decreases • Easier to become exporter, cXF falls with cDH • Due to increased entry: • Entry in Foreign relatively more attractive • More varieties for consumers • Shift towards domestic varieties • Prices • More expensive imports, but more competition • Net effect: Decrease in average price • Net effect: Decrease in price variance

  15. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion GE Effects in Foreign (simulation) (p2) • Welfare gain • More varieties, lower average prices • Drawback: Consumers cannot buy cheap imported goods (fall in price variance) • Again, if t H >>t F and LH >> LF , the negative effect may dominate.

  16. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion Anti-Dumping vs. Unilateral Trade Restriction • Anti-dumping equilibrium: Effects similar to unilateral trade restriction (increase in t F) • A comparison can be made in simulations • Anti-dumping corresponds to a large trade restriction • Anti-dumping has stronger effect on: • Export propensity in Home • Entry in Home, entry in Foreign • Total entry falls more • Variety trade flows distorted more • Welfare reduced by less in Home

  17. Presentation plan: • Research question • Background: anti-dumping literature • The model • The anti-dumping equilibrium, results • Conclusion Conclusion • Firms in Home • Severely reduced export oppurturnity, less entry • Non-exporting incumbents gain (profits up with cDH) • “New non-exporters” lose export profits • AD exporters lose profits on both markets • Firms in Foreign • More attractive market, more entry • Gains on export market; new exporters • Domestic profit per firm reduced • Policy insights • Attracts variety-producing firms, jobs • Large increase in net exports of varieties • Harsh anti-dumping conduct can lead to welfare gains • Beggar thy neighbor, but less than unilateral trade restriction

More Related