TY - JOUR AU - Staiger,Robert W. AU - Wolak,Frank A. TI - Strategic Use of Antidumping Law to Enforce Tacit International Collusion JF - National Bureau of Economic Research Working Paper Series VL - No. 3016 PY - 1989 Y2 - June 1989 UR - http://www.nber.org/papers/w3016 L1 - http://www.nber.org/papers/w3016.pdf N1 - Author contact info: Robert W. Staiger Department of Economics Stanford University Landau Economics Building 579 Serra Mall Stanford, CA 94305-6072 Tel: 650/723-0533 Fax: 650/725-5702 E-Mail: rstaiger@stanford.edu Frank A. Wolak Department of Economics Stanford University Stanford, CA 94305-6072 Tel: 650/723-3944 Fax: 650/725-5702 E-Mail: wolak@zia.stanford.edu AB - We consider the impact of domestic antidumping law in a two-country partial equilibrium model where domestic and foreign firms tacitly collude in the domestic market. Firms engage in an infinitely repeated game, with each period composed of a two-stage game. In the first stage each firm chooses capacity before stochastic domestic demand is realized. In the second stage, after demand is realized, each firm then sets price. We show that the introduction of domestic antidumping law typically leads to the filing of antidumping suits by the domestic industry in low demand states. and to more successful collusion and greater market share for domestic firms during periods of low demand as a result. This occurs in spite of the fact that antidumping duties are never actually imposed. That is, the entire effect of antidumptng law comes in the form of a threat to punish foreign firms with a duty if they should "misbehave." Such a threat is made credible by filing a suit and, because it is credible, never has to be implemented. We conclude that the trade-restricting effects of antidumping law may have little to do with whether duties are actually imposed. ER -