Chapter 11 Pushing Exports

Link to syllabus

Dumping

Defined as: selling exports at a price that is too low, or at a price less than “normal” or less than “fair market value.” In an international context, dumping is price discrimination favoring buyers of exports.It has also been described as selling at below average cost.

Types: Predatory (infers the intention of raising price afterwards) Cyclical dumping (what people do during recessions) Seasonal dumping (sales) Persistent dumping: a firm with market power uses price discrimination to increase profits.

Figure 11.1 Page 231 Persistent Dumping

Standard example of dumping being economically rational.

Figure 11.2 page 234Top 12 initiators of anti-dumping cases

Gov’t policies responding to dumping:

• If persistent dumping, welcome their subsidies to our consumption

• Predatory dumping is rare (book says)

• Seems to say don’t worry about seasonal or cyclical

• WTO allows retaliation if dumping hurts domestic producers who compete with imports

Proposals for Reform (pp. 239-40)

1. Limit to situations of plausible predatory dumping

2. Consider harm to consumers as well as producers

3. Replace anti-dumping with safeguard policy. This involves temporary import protection/restriction when a sudden in imports causes injury to producers. Issue is not on alleged unfairness, but rather to focus on adjustment

Figure 11.3 page 242Export Subsidy: small country

DifferentfromProductionSubsidy

Figure 11.4 page 244Export subsidy, large country

Domestic Cost is f+h + (I+j+k+l+m)

World well being declines by f+h+u

Yuck!

Figure 11.5 page 245 Export Subsidy turns Importable Product into an Export

Figure 11.6 page 247. Foreign export subsidy and countervailing duty

Link to old exams

Figure 11.7 page 254. Two firm game: Airbus vs. Boeing

Ad for book on Boeing/Airbus

Figure 11.8 page 255Two firm game with government subsidies

Table 7.1 International Duopoly Game. P. 244

Different text - Thompson

Table 7.2 Duopoly Dilemma p. 247

Other Text. Shares of World R&D Spending.

Nominal Price of Oil, 1970-2000 (DOE)

Adelman World Price, 1997 $

DOE Projection of World Oil Price

Dumping Cases in US involving steel, 1998/99 Earlier Edition. Page 228 taken out