In this paper we explore the design of optimal incentive-compatible anti-du
mping (AD) measures. When the weight given to the domestic firm's profit in
the government's objective function is relatively small, it is shown that
no AD duty should be imposed if the foreign firm reports its own costs, but
a constant AD duty should be imposed if the domestic firm reports the fore
ign firm's cost. When this weight is large, in either case of reporting the
AD duty is a prohibitive tariff. The optimal AD measures are modified in t
he presence of a GATT/WTO constraint.