Working Paper: CEPR ID: DP1590
Authors: Pedro Pita Barros; Xavier Martinez-Giralt
Abstract: We show that the nature and extent of trade is significantly affected by the pricing policy that firms are allowed to employ. A switch from discriminatory to non-discriminatory pricing (e.g. strict anti-dumping laws) leads to a switch from two-way trade to one-way trade. It is far from true that consumers will necessarily be favoured by such a policy switch. The distribution of gains is also significantly affected by relative country size.
Keywords: antidumping legislation; market segmentation; one-way trade
JEL Codes: F12; F13; K29; L13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Antidumping laws (F18) | Shift from two-way trade to one-way trade (F10) |
| Switch from discriminatory to non-discriminatory pricing (D49) | Shift from two-way trade to one-way trade (F10) |
| Market power in the large country (L11) | One-way trade (F19) |
| Enforcement of antidumping laws (F18) | Pricing strategies (D49) |
| Pricing strategies (D49) | Trade volumes (F10) |
| Two-way trade equilibrium (F16) | Global welfare increases (D69) |
| One-way trade equilibrium (F16) | Total surplus of the larger country decreases (F69) |
| One-way trade equilibrium (F16) | Smaller country improves its welfare position (D69) |
| Antidumping laws (F18) | Market segmentation and price setting (D49) |