ANTIDUMPING POLICY

When an antidumping policy involves the imposition of duties, the thre at of antidumping enforcement may alter strategic behavior under imper fect competition. This point is illustrated in a model where the forei gn firm is a monopolist in its local market, but competes with a domes tic firm in the home country's market. The welfare effects of an antid umping policy are examined under quantity-setting and price-setting be havior with either perfect or imperfect substitutes. Imposing an antid umping policy frequently improves domestic welfare under quantity-sett ing behavior, and typically worsens it under price-setting behavior. S urprisingly, foreign welfare may improve.