Antidumping, Retaliation Threats, and Export Prices

Abstract

Utilizing four-dimensional (firm-product-destination-year) Brazilian firm-level export data, we show that antidumping (AD) duties result in a significant and dramatic increase in the unit values of the products that firms export to duty-imposing countries. Furthermore, we examine the effect of potential (retaliatory) AD duties on the unit price of the firms' shipments. Our findings suggest that AD activities in Brazil lead Brazilian exporting firms to increase their unit export prices for the named industries' products to decrease the dumping margin and avoid the threat of retaliation by the target countries. JEL codes: F10, F13, O54, C23

Antidumping Protectionism and Globalized Economies

“…56 Meckling and Hughes (2017) further suggest that transnational corporations operating in the solar photovoltaic industry may prefer open trade due to fears or threats of retaliation along other product lines, which could damage economic profits (232). Avsar (2013) similarly found that AD activities in Brazil lead Brazilian exporting firms to increase export prices for the products of named industries to decrease dumping margins and avoid threats of retaliatory measures by other countries. There is reason to believe, therefore, that firms include the possibility of retaliatory antidumping measures within their strategic calculus.…”

Strict trade measures, flexible financing

“…One body of research studies the impact of antidumping on global trade. Within this research, scholars have documented the trade and price impacts of antidumping (including, but not limited to Krupp, 1994; Prusa, 1997; Prusa, 2001; Brenton, 2001; Bown & Crowley, 2007; Ganguli, 2008; Vandenbussche & Zanardi, 2010; Avsar, 2013; Besedeš & Prusa, 2017). This set of papers suggests that antidumping duties increase import prices, and they have a dramatic impact on trade flows not only from target countries but also from third countries not named in the investigations.…”

“…Konings and Vandenbussche (2013) estimate the impact of antidumping on export behavior of French firms protected by antidumping and finds that while non‐exporting firms benefit from protection, domestic sales of export‐oriented firms decrease because of antidumping. Using Brazilian firm‐level data, Avsar (2013) shows that even the threat of antidumping in the export markets increases the prices of shipments. Chandra (2019) demonstrates that U.S. antidumping duties lead the Indian exporters to alter their product‐scope to markets other than the United States.…”

“…Given the numerous antidumping duties imposed on hundreds of products by Turkish authorities in the post‐millennium period, it is important to understand how these changes in trade policy influence competition and how firms adjust to it. The literature has shown that these adjustments have taken place through reallocation of resources from less productive firms to more productive firms (Pierce, 2011), less productive firms exiting the international market (Lu et al, 2013), and exporters increasing prices because of antidumping duties (Avsar, 2013; Luu Hai, 2020). This study presents another margin of adjustment, payment terms in cross‐border transactions when targeted by an antidumping duty in the export destination.…”