Antidumping, Signaling and Cheap TalkJim Cassing and Ted ToIn the United States, there is evidence that domestic non-filing firms do not always support dumping investigations. Absent other factors, domestic firms have an unambiguous incentive to support petitions filed by other domestic producers. We argue that in cases where the non-complainant firm is not a significant importer or exporter, the most plausible explanation is that non-support acts as a costly signal of private information. Extending the model to allow firms to engage in preplay communication, such signaling can take place even in the absence of an investigation. We then allow firms to endogenously initiate investigations and find that firms may be reluctant to even initiate a petition because doing so may be viewed as a sign of weakness. These latter results provide an explanation for the puzzling observation that fewer antidumping investigations are filed than one would expect.A PDF version of the paper is downloadable. |