Anti-dumping protection, price undertaking and product innovation

This paper examines how price undertaking policies affect the product investments of firms in an intra-industry trade model. We show that the dumping margin will decline if the products become More differentiated. Under bilateral anti-dumping actions, relative to those under free trade, the aggregate product R&D investment may either increase or decrease, depending on the tolerable dumping margin set by the governments. By contrast, the aggregate product R&D will definitely decline and the products will become less differentiated if only one government implements anti-dumping actions. (c) 2015 Elsevier Inc. All rights reserved.