TY - JOUR
T1 - Dumping, adjustment costs and uncertainty
AU - Bernhardt, Dan
N1 - Funding Information:
“MACSYMA. a computer package developed by the Mathlab group at the Massachusetts Institute of Technology [with the support of the U.S. Energy Research and Development Administration under contract E(ll-l)-3070 and the National Aeronautics and Space Administration under NSG 13231 was used to perform many of these calculations.
PY - 1984/12
Y1 - 1984/12
N2 - Domestic demand uncertainty in the presence of adjustment costs can cause profit-maximizing firms to sell output abroad at a loss. Firms may dump output at prices below long-run marginal and average productions costs with probability arbitrarily close to one. The model predicts dumping is particularly likely in process industries such as steel. Closed form dumping solutions and interesting comparative statics are obtained. Also, the effect of domestic competition on dumping is examined. I find domestic competition increases total dumping, although a monopolist maximizing output subject to a zero expected profit constraint will dump more than a competitive industry.
AB - Domestic demand uncertainty in the presence of adjustment costs can cause profit-maximizing firms to sell output abroad at a loss. Firms may dump output at prices below long-run marginal and average productions costs with probability arbitrarily close to one. The model predicts dumping is particularly likely in process industries such as steel. Closed form dumping solutions and interesting comparative statics are obtained. Also, the effect of domestic competition on dumping is examined. I find domestic competition increases total dumping, although a monopolist maximizing output subject to a zero expected profit constraint will dump more than a competitive industry.
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U2 - 10.1016/0165-1889(84)90013-7
DO - 10.1016/0165-1889(84)90013-7
M3 - Article
AN - SCOPUS:28244441207
SN - 0165-1889
VL - 8
SP - 349
EP - 370
JO - Journal of Economic Dynamics and Control
JF - Journal of Economic Dynamics and Control
IS - 3
ER -