The Political Economy of Anti-dumping Protection: A Strategic Analysis (Contributions to Economics)

This book deals with anti-dumping measures (AD) and investigates two questions: First, what country characteristics affect AD use and notably, do domestic political institutions have an effect? Second, (how) is the decision to impose a new AD measure affected by anticipation of trading partners’ potential retaliation? This book applies a strategic perspective to AD to address these questions, presenting a game-theoretic model together with an empirical test. The approach sheds light on the dynamics of interaction between trading partners and allows to capture selection processes which underpin the trade restrictions that can actually be observed. The book provides a fresh look on when and how trading powers apply antidumping measures, how this is shaped by strategic interaction and whether institutions do make a difference to the outcome. In a period in which the international trading system has to cope with numerous stresses such as an increased resort to administered protection largely by big emerging economies, this is a timely and important contribution. __Dr. Klaus Günter Deutsch, Managing Director, Research, Economic and Industrial Policy, German Federation of Industries__ This book successfully integrates two research traditions in international politics – the traditional view that looks at domestic factors of anti-dumping policies and the strategic view that conditions the imposition of anti-dumping measures on the likely, retaliatory behavior of the trading partner. The result is an informative and constructive examination of anti-dumping protection and trade wars in the WTO. __Prof. Dr. Thomas Bräuninger, Chair of Political Economy, University of Mannheim, Germany__ "The Political Economy of Anti-Dumping Protection - A Strategic Analysis" is a major contribution to the important and growing field international political economy. Starting with the “traditional” comparative institutional analysis, which focuses on the implications of democratic and non-democratic regimes for using anti-dumping measures in trade politics, the second part applies a strategic perspective on this type of sanctions uncovering the dynamic interactions between a challenging and challenged countries. For all those interested in understanding the logic of sanctions, the role of institutions, and in how to examine the implications of theoretical models for international political economy this book is a “must read". __Prof. Dr. Thomas König, Chair of Political Science II, University of Mannheim, Germany.__ Contents 8 List of Graphs 10 List of Tables 12 Chapter 1: Introduction 13 Chapter 2: Institutions and Trade Policy: A Review 20 2.1 Institutions Shape Countries ́ Trade Policies 22 2.1.1 Institutions and Trade Policy: Overview of Theoretical Arguments 23 2.1.2 Institutions and Trade Policy: Empirical Studies 28 2.2 Institutions and Countries ́ Interaction on Trade Issues 36 2.3 A Strategic Perspective for the Analysis of Trade Policy 40 2.4 Summary 47 Chapter 3: Winning Coalition Size and the Use of Anti-dumping 49 3.1 Does the Size of the Winning Coalition Affect AD? The Theoretical Rationale 50 3.1.1 A Brief Account of Selectorate Theory 51 3.1.2 Selectorate Theory and Trade Policy 54 3.2 Applying Selectorate Theory to Anti-dumping 56 3.2.1 Administered Protection: A Special Case? 56 3.2.2 Public Goods, Private Goods and AD 57 3.2.3 Hypotheses 64 3.3 Data and Empirical Approach 64 3.3.1 Description of the Sample 64 3.3.2 Operationalisation of Explanatory Variables 67 3.3.3 Dependent Variable 68 3.4 Stylised Facts About AD Use and Descriptive Data Analysis 70 3.4.1 AD Use and the Size of the Winning Coalition: Descriptive Assessment 71 3.5 The Empirical Model 73 3.5.1 The Basic Modelling Concept 73 3.5.2 Adapting the Framework to AD 75 3.5.3 Assessing AD Use: Logit Model Results 78 3.5.4 Assessing Intensity of AD Use: Tobit Model Results 80 3.6 Discussion of Results 85 Chapter 4: A Strategic Analysis of Anti-dumping 89 4.1 Developing a Strategic Model of Anti-dumping Investigations 90 4.1.1 Assumptions of the Model 91 4.1.1.1 Two Stages 92 4.1.1.2 Two Players 93 4.1.2 Determining the Payoffs in the Model 95 4.1.3 Solving the Game and Deriving Comparative Statics 98 4.1.4 Modelling the Effect of Institutions 100 4.1.5 Discussion of Assumptions for Extension and Generalization 102 4.2 The Empirical Model 105 4.2.1 Deriving the Empirical Model 105 4.2.2 Specification of Utilities 107 4.3 Data and Variables 108 4.3.1 Description of the Sample and Variables 108 4.3.1.1 Constructing the Dependent Variables and Defining the Sample 110 4.3.1.2 Independent Variables 114 4.4 Empirical Results 120 4.4.1 Initial Descriptive Data Analysis 120 4.4.2 Strategic Probit Regression Results 122 4.4.3 Examination of Marginal Effects and Discussion of Results 124 4.4.3.1 Effects of Dichotomous Variables 124 4.4.3.2 Effects of Continuous Variables 128 4.5 Summary 136 Chapter 5: Concluding Remarks 139 Appendix 142 Appendix to Chap. 3 142 Robustness Checks 147 Appendix to Chap. 4 156 Robustness Checks 157 References 168 Further Sources: Press articles and Other Online Sources 176 This book deals with anti-dumping measures (AD) and investigates two questions: First, what country characteristics affect AD use and notably, do domestic political institutions have an effect? Second, (how) is the decision to impose a new AD measure affected by anticipation of trading partnersĺl potential retaliation? This book applies a strategic perspective to AD to address these questions, presenting a game-theoretic model together with an empirical test. The approach sheds light on the dynamics of interaction between trading partners and allows to capture selection processes which underpin the trade restrictions that can actually be observed. The book provides a fresh look on when and how trading powers apply antidumping measures, how this is shaped by strategic interaction and whether institutions do make a difference to the outcome. In a period in which the international trading system has to cope with numerous stresses such as an increased resort to administered protection largely by big emerging economies, this is a timely and important contribution. Dr. Klaus G©ơnter Deutsch, Managing Director, Research, Economic and Industrial Policy, German Federation of Industries This book successfully integrates two research traditions in international politics ĺl the traditional view that looks at domestic factors of anti-dumping policies and the strategic view that conditions the imposition of anti-dumping measures on the likely, retaliatory behavior of the trading partner. The result is an informative and constructive examination of anti-dumping protection and trade wars in the WTO. Prof. Dr. Thomas Br©Þuninger, Chair of Political Economy, University of Mannheim, Germany "The Political Economy of Anti-Dumping Protection - A Strategic Analysis" is a major contribution to the important and growing field international political economy. Starting with the ĺltraditionalĺl comparative institutional analysis, which focuses on the implications of democratic and non-democratic regimes for using anti-dumping measures in trade politics, the second part applies a strategic perspective on this type of sanctions uncovering the dynamic interactions between a challenging and challenged countries. For all those interested in understanding the logic of sanctions, the role of institutions, and in how to examine the implications of theoretical models for international political economy this book is a ĺlmust read". Prof. Dr. Thomas K©œnig, Chair of Political Science II, University of Mannheim, Germany Front Matter....Pages i-xi Introduction....Pages 1-7 Institutions and Trade Policy: A Review....Pages 9-37 Winning Coalition Size and the Use of Anti-dumping....Pages 39-78 A Strategic Analysis of Anti-dumping....Pages 79-128 Concluding Remarks....Pages 129-131 Back Matter....Pages 133-167