Endogenous trade restrictions and exporters' pricing behavior

This paper analyses the effect of antidumping (AD) duties on the pricing behaviour
of exporters targeted with these measures. Using product and firm-level
data for South Korea, the study provides evidence of increased export unit values
and firms’ markups following the imposition of AD ad valorem duties. These findings
are consistent with the hypothesis that, unlike other import tariffs, AD duties are
not absorbed by exporters. The results on firms’ average markups also suggest that
the price adjustment following the imposition of AD duties occurs mostly through
the export price, and not through reductions in the exporter’s home price. The
analysis controls for the presence of other trade measures as well as the endogeneity
in AD and other contingent protection measures.
Keywords: Endogenous trade policy, Import tariffs, Ad valorem duties, Antidumping,
Markup, Unit values, Contingent protection.