Dumping in a linder model of trade with multiple retail channels

Abstract

The last decade has witnessed an accelerating adoption of AD laws by LDCs and their increasing usage against developed countries. Our model of third degree price discrimination with heterogenous consumers that have differing preferences for quality in the two countries suggests that this is likely to continue. Duo-polistic interaction may yield bilateral dumping, or unilateral dumping in either direction, under free trade. Even when dumping is unidirectional, there is a compelling basis for the introduction of AD laws by both governments. This mitigates competition, which is beneficial for both firms, and portends pessimism for an abatement of this recent proliferation of AD laws and complaints. © Blackwell Publishing Ltd 2005.