Dumping and Predatory Pricing in an International Duopoly
The occurrence of dumping and predatory pricing is discussed in a deterministic price-setting, two-period, international duopoly for differentiated products. In a model with general demand and cost functions it is shown that undercost pricing can be a profitable strategy, if period-markets are linked on the demand side. It might be profitable for one or for both producers at the same time. Predatory pricing and cost-based dumping are thus economically symmetrical phenomena. They are, however, treated asymmetrically by law: Whereas the domestic producer may file an anti-dumping petition against his foreign rival, the foreign producer lacks such a possibility.
KeywordsDemand Function Switching Cost Profit Maximization Network Externality Predatory Price
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