Domino Dumping, I: Competitive Exporters

Abstract

When exporting firms face the prospect of voluntary export restraints, they have an incentive to export more than with no prospect of a voluntary export restraint, since greater exports lead to larger license allocations in the event of a voluntary export restraint. Export-country governments' incentives differ, leading either to export tax or subsidy, depending on the circumstances. The prospect of one departure from free trade, thus, leads to another, a domino effect. Antidumping enforcement will ordinarily not eliminate and ironically may increase dumping. Copyright 1992 by American Economic Association.

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