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Trade diversion and antidumping effectiveness: insights from a residual demand model

Trade diversion and antidumping effectiveness: insights from a residual demand model A residual demand model is developed to predict the likely effects of an antidumping duty in the presence of trade diversion. A key insight is that the ability of an AD duty to increase the welfare of producers in the country imposing the duty hinges on the import supply elasticity for product from non‐named sources. The only instance in which this is not true is when supply for product from the named source is perfectly elastic. In this case, the welfare gain to domestic producers is maximised irrespective of the supply elasticity for imports from non‐named sources. A comparison of the residual demand model with the Armington model suggests the latter significantly understates both trade diversion and domestic producer gains from the duty. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Australian Journal of Agricultural Resource Economics Wiley

Trade diversion and antidumping effectiveness: insights from a residual demand model

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References (42)

Publisher
Wiley
Copyright
Copyright © 2017 Australian Agricultural and Resource Economics Society Inc.
ISSN
1364-985X
eISSN
1467-8489
DOI
10.1111/1467-8489.12203
Publisher site
See Article on Publisher Site

Abstract

A residual demand model is developed to predict the likely effects of an antidumping duty in the presence of trade diversion. A key insight is that the ability of an AD duty to increase the welfare of producers in the country imposing the duty hinges on the import supply elasticity for product from non‐named sources. The only instance in which this is not true is when supply for product from the named source is perfectly elastic. In this case, the welfare gain to domestic producers is maximised irrespective of the supply elasticity for imports from non‐named sources. A comparison of the residual demand model with the Armington model suggests the latter significantly understates both trade diversion and domestic producer gains from the duty.

Journal

The Australian Journal of Agricultural Resource Economics – Wiley

Published: Apr 1, 2017

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