Effects of Anti-dumping Measures
A country that is exposed to dumping will benefit from the lower prices. The consumers of
the importing country will have a larger consumer surplus since they have access to a larger
supply of goods to a lower price. These consumer benefits will be lost when the importing
country imposes an antidumping measure on the low-price imports. When the duties are
levied on the imports the products will have the same price-level in both domestic and foreign
market. When the price is increased in the foreign market the supply will decrease and
the producers have to comply with an inefficient low level of output. The consumers in the
importing country have to pay a higher price for the products and have less consumer surplus.
Other customers will not pay the higher price and are driven out of the market, which
leads to a dead-weight social cost (Howse & Trebilcock, 1995).
Imposing an anti-dumping measure will cause all the consumers and industrial user benefits
from dumping to disappear. The importing country will drive the dumped products out of
the market if the anti-dumping duties are high enough, or the product might remain in the
market at higher prices. If the dumped products leave the market, the domestic firms are
able to raise their prices due to lesser competition. If an anti-dumping measure is introduced
in a market where the domestic industry is composed of only one producer, it might
lead to that producer charging monopoly prices since there will be no competition in the
market (Li, 2003).
Trade diversion is another effect of anti-dumping measures. When the dumped imports
decrease, the domestic market share, or imports from a third country, increases. By putting
anti- dumping duties on the dumped imports, those products will become more expensive. Consumers still want to consume the products but at the lowest...