Nelson, Douglas R., and Hylke Vandenbussche. The WTO and Anti-Dumping.

Nelson, Douglas R., and Hylke Vandenbussche. The WTO and Anti-Dumping, volume I. Cheltenham, UK: Edward Elgar, 2005,1,248 pp., $500.00 hardback (for both volumes I and II).

Volume I of this two-volume series is a collection of seminal academic papers on dumping and on antidumping policies divided into twenty-one chapters, along with an introduction by the editors. The book is divided into five main parts: classic references on dumping dating back to the early part of the twentieth century; modern analyses attempting to explain dumping; economic effects of dumping; economic effects of antidumping policies; and industry studies of the impact of antidumping policies. This book is priced and sold as a two-volume set; it does not appear to be possible to purchase Volume I separately. I was asked to review Volume I.

The first part of the book, classic references on dumping, contains papers by Jacob Viner, T.O. Yntema, Joan Robinson, and Gottfried von Haberler. Chapter 1 is a collection of papers by Viner originally published in 1923 as part of his classic text, Dumping: A Problem in International Trade. In spite of the fact that they were published more than eight decades ago they still read very well today. Defining dumping as price discrimination between national markets, Viner described a number of different types of dumping and classified each type as sporadic, short run/intermittent, or long run/continuous. Viner went on to consider the influence of dumping on prices in the dumping country and asserted that, "There is no conceivable combination of demand schedule and cost curve having any relation to actual conditions which can render profitable an increase in the domestic price which was not equally profitable before resort to dumping of this type." Chapter 2 is a paper by T.O. Yntema that analyzed Viner's assertion. Yntema found that it is possible for dumping to raise the domestic price if it is done by monopolist with an upward sloping marginal cost curve. However, Yntema believed that the case of decreasing marginal cost was more plausible, and under these conditions dumping lowers the domestic price and benefits domestic consumers.

Chapter 3 is a collection of two classic papers by Joan Robinson on monopolistic price discrimination that, among other topics, considers the case of international price discrimination. Chapter 4 is a 1936 survey of the literature on dumping by Gottfried von Haberler that provides an excellent summary of the literature as it stood at that time.

The second part of the book, modern analyses attempting to explain dumping, contains papers by James Brander and Paul Krugman, Wilfred Ethier, James Anderson, and Richard Clarida. Brander and Krugman's well-known paper on reciprocal dumping in Chapter 5 develops a model of oligopolistic competition between two national monopolists selling identical products in segmented national markets. Despite the fact that the products are identical, they find that there will be two-way trade in the common product and that each firm will sell at a higher price in its domestic market than in its export market.

The other three papers in the second part of the book attempt to explain how dumping might occur in competitive environments. Dumping in these papers is defined not as price discrimination between national markets but as cost dumping, i.e., selling a product on the international market at less than average total cost. In Ethier's paper (Chapter 6) competitive firms adjust to adverse demand shocks by layoffs rather than adjusting wages due to labor market imperfections. As a result the wage a firm pays exceeds the value of the marginal product of labor in adverse states of the world, which is tantamount to cost dumping (the wage is less than the value marginal product of labor in good states of the world). The paper by Anderson in Chapter 7 develops a political-economic explanation for dumping. If exporting firms face the risk that their government will impose a voluntary export restraint (VER) in the future, and if a firm's share in the VER depends on its pre-VER market share, competitive firms will dump now to enhance their VER shares should a VER be imposed. The paper by Clarida in Chapter 8 develops a model of an open economy in which firms must first produce in order to learn about their production function. The present value of entry into an industry includes the value to a producer of learning its productivity level, which is valuable information because the most productive producers earn positive rents. Competition among producers for these rents can in some circumstances drive down the product price so much that the industry as a whole suffers losses.

The third part of the book, economic effects of dumping, contains papers by Richard Boltuck, Robert Willig, and Kenneth Kelly and Morris Morkre. Boltuck's paper in Chapter 9 outlines the methodology used by the U.S. International Trade Commission as of the late 1980s in assessing the effects of price dumping on U.S. industry. Boltuck considers both price dumping (price discrimination) and cost dumping because U.S. antidumping legislation covers both types. Willig's paper (Chapter 10) is essentially an update on the classic works by Viner and von Haberler, and links contemporary work in industrial organization to dumping and antidumping policies. Kelly and Morkre's paper in Chapter 11 develops an applied partial equilibrium model to examine the magnitude of injury to U.S. industry using data from all final U.S. countervailing duty and antidumping duty investigations during 1980-88, and find that the injuries were small in most cases.

The fourth part of the book, economic effects of antidumping policies, contains several papers on how domestic and foreign firms adjust to antidumping legislation. Chapter 12 is a paper by J. Michael Finger, which argues that the rhetoric behind antidumping laws is inconsistent with their true purpose, which is ordinary protectionism. Papers by Michael Leidy and Bernard Hoekman (Chapter 13), Robert Staiger and Frank Wolak (Chapter 14), and James Reitzes (Chapter 15) examine the strategic response of an exporting firm to antidumping action and the threat of such action. Chapter 16 is a paper by Simon Anderson, Nicolas Schmitt, and Jacques-Francois Thisse that was one of the first to make antidumping legislation endogenous. It models lobbying by firms and consumers in two countries over whether to impose antidumping laws. Chapter 17 is a paper by Michael Gallaway, Bruce Blonigen, and Joseph Flynn that uses a computable general equilibrium (CGE) model to estimate the welfare cost in 1993 of U.S. antidumping and countervailing duty laws. They found the cost to be about $4 billion, significantly higher than earlier estimates. Chapter 18 is a paper by Hylke Vandenbussche, Reinhilde Veugelers, and Jozef Konings that considers the role of unions in the probability that an industry files for antidumping protection.

The fifth part of the book, industry studies of the impact of antidumping policies, contains three papers. Chapter 19 is a paper by Stefanie Lenway, Kathleen Rehbein, and Laura Starks that empirically analyzes the impact of trade restrictions on the U.S. steel industry, a frequent user of U.S. antidumping laws. A paper by Robert Staiger and Frank Wolak (Chapter 20) empirically examines the response of U.S. imports and domestic production to the filing and resolution of antidumping cases. The final paper in the volume (Chapter 21), by Corinne Krupp and Patricia Pollard, analyzes the response of imports of chemical products into the United States at various stages of antidumping investigations, and found a wide range of responses, not all consistent with theory.

Based on Volume I, the title of the book is somewhat of a misnomer. Although several papers in Volume I touch on the WTO or its predecessor, the General Agreement on Tariffs and Trade (GATT), none of them squarely focuses on the WTO. From the editors' introduction to both volumes (included in Volume I) it appears that papers directly relevant to the WTO are put off until the final part of Volume II. Nonetheless, Volume I is a valuable reference book and the papers in the volume are essential reading for any economist interested in antidumping.

David Abler

Pennsylvania State University