This article uses a successive duopoly model to show that some antidumping retaliation may in fact be a chain effect of an antidumping policy. Findings present that if dumping initially takes place in the home countrys final good market, then antidumping protection in the final good market will result in dumping in the foreign countrys input market, thus leading to further antidumping protection, which will reinforce the incentive of the home downstream firm to initially petition for antidumping protection. Moreover, we demonstrate that an antidumping duty in vertically related markets may not provide this industry with adequate protection. Finally, when taking the antidumping chain effect into account, we show that the government which initially faces the dumping may determine a higher antidumping duty if the production inefficiency of the home upstream firm relative to the foreign upstream firm is in the medium range.

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This paper compares the effect of tariffs and that of equivalent quotas on the domestic firm's production technology choice when it competes with a foreign firm in the domestic market. It is shown that under Bertrand price competition, the ranking of technology under tariff protection and quota protection is ambiguous, as it depends on the relative strength of the strategic vs output effects. The equivalent quota regime can generate a higher-technology (implying a lower production cost) choice than the tariff regime if the strategic effect dominates the output effect. In contrast, the technology level is necessarily higher under the tariff regime than under the equivalent quota regime when the firms engage in Cournot quantity competition. Copyright � 2006 The Authors; Journal compilation � 2006 Blackwell Publishing Ltd.