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homework8 - ProblemSet8 1 Whatisdumping?? dumping? ?...

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Problem Set 8 1. What is dumping? What types of dumping exist? What are the welfare effects of non predatory dumping? Do a country’s trading partners experience a net welfare loss as a result of non predatory dumping by one of that country’s industries? If other countries gain from such dumping, why is dumping so widely viewed as a problem and why does the WTO allow trading partners to impose counterveiling tariffs to offset the effects of such practices? 2. What is predatory dumping and why is it regarded as a potential source of adverse economic effects on trading partners (those who import the products affected by predatory dumping)? 3. Using the small country assumption for the exporting country, show the economic welfare effects of an export subsidy as compared to a subsidy on all domestic production. In light of your analysis, provide an explanation for why governments often prefer the use of export subsidies to increase producer surplus in the affected industry rather than a subsidy on all
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