Are antidumping duties an antidote for predation?

Questions concerning the efficacy of antidumping policy are becoming increasingly important at present as the use of such measures proliferate (see, e.g. Bown/McCulloch, 2012, for a recent discussion of use of antidumping measures as protection in emerging economies).

Our paper presents a theoretical analysis of the use of antidumping measures to counteract foreign predation and comes to the conclusion that antidumping policy is not a good measure to achieve this. The main reason for this lies in the nature of dumping and predation being two separate issues; this is exemplified in proposition 4 in the paper.

Dumping and predation are separate and distinct matters:

1. Dumping and predation may coexist.
2. Predation may occur when dumping does not.
3. Dumping may occur when predation does not.
4. Neither dumping nor predation may occur.

While antidumping duties are supposed to offset unfair pricing practices by foreign firms, they generally punish foreign firms for activities such as price discrimination and selling below costs, which are generally both acceptable and legal for home firms.

1. Anti-dumping duties cannot be justified as a policy mechanism to prevent predation by foreign firms.
2. To fight predation by foreign firms, home competition policies or import quotas could be more appropriate instruments than anti-dumping duties.
3. Compared to accommodation, predation by foreign firms is not necessary welfare deteriorating for the home market.

A main policy conclusion for the international community and emerging economies alike is that the current trend to restrict the use of domestic policies for the sake of trade integration while leaving antidumping remedies in place should be reconsidered.