Design of an Antidumping Rule with Incomplete Information about Material Injury

Kohler, Philippe; Moore, Michael O.

doi:1998.13.1.62

Journal of Economic Integration 1998 March;13(1) :62-88.
DOI: https://doi.org/10.11130/jei.1998.13.1.62

Design of an Antidumping Rule with Incomplete Information about Material Injury

Philippe Kohler, Michael O. Moore

University of Montpellier
The George Washington University

ABSTRACT

This paper deals with the inability of an administering authority to directly observe the level of material injury in antidumping petitions. We focus on the use, by the domestic firm, of private information about injury in order to obtain higher protection. By using an incentive framework, we show that asym metric information about the level of injury can be resolved by using a mix of lump-sum compensation, domestic unit taxes and antidumping duties rather than just import duties. Surprisingly, the lump-sum transfer decreases and the domestic unit tax increases with the level of material injury. This efficient antidumping rule will induce the domestic firm to tell the truth about the level of material injury. (JEL Classification: F13, L50)

REFERENCE

1.	Baldwin, R. [1985], The Political Economy of US Import Policy, Cambridge: MIT Press

2.	Baldwin, R. and M. Moore [1991], "Political Aspects of the Administration of the Trade Remedy Laws," in Boltuck, R. and R. Litan, (eds.) [1991], Down in the Dumps: Administration of the Unfair Trade Laws, Brookings Institution: Washington DC.