Why Does the WTO Have an Antidumping Agreement?

Abstract

This paper develops a model that o¤ers a plausible interpretation for the empirical observation of di¤usion of antidumping (AD) laws amongst 1 WTO members. Contrary to the regnant belief that this proliferation is driven mainly by retaliatory motives, our model shows that adoption and use of AD laws involve a cooperative act amongst WTO members in an in…nite horizon game. The di¤usion of AD laws need not result in a Prisonner's dilemma. Instead we show that the AD agreement of the WTO can serve as a risk-sharing vehicle amongst WTO members in response to adverse shocks incurred by domestic producers. *We appreciate the comments of Mostafa Beshkar, Piyush Chandra, Richard Chisik, Kaz Miyagiwa, and participants at the Midwest International Economics Group Meetings. Hartigan thanks LICOS of the Katholic University of Leuven in Belgium, where this paper was initiated, for its hospitality. He also thanks the National University of Singapore, where parts were written, for its hospitality.