Innovation, Antidumping And Retaliation
The authors study the effect of contingency trade policy in a multi-country oligopoly model with and without R&D opportunities. They show that firms benefit from unilateral protection but initiate AntiDumping (AD) only against the targets domiciled in substantially smaller countries. Also, AD filings are more likely when firms face R&D opportunities. These results are consistent with recent empirical findings, namely, actions are mostly between industrial and developing countries, developing countries use AD to retaliate against industrial countries, and AD is concentrated in R&D-intensive industries. Interestingly, intellectual property rights violations in developing countries have no connection to AD filings.