The signaling power of trade protection

This paper proposes an empirical analysis to provide new insight into the trade diversion effects of antidumping (AD) policy. Trade diversion is the shift in trade from named countries in an AD investigation to non-named countries. Previous studies have concluded that AD action causes a considerable drop in exports from named countries, however the extent to which trade is diverted to non-named countries is still an open debate. This paper examines to see whether AD action on named countries can have signaling effects on non-named countries. To examine the trade effects on non-named countries, a time series data at an 8-digit product level is constructed for all cases initiated between 1997 and 2003 in the European Union. The paper provides evidence that antidumping policy has signaling effects on non-named imports.     

Trade policy in the face of price and non-price strategies

When selling their products domestically or internationally, firms rely on more than just price as a strategic variable. They also rely on non-price instruments such as advertising and/or R&D investments. Any trade policy that affects or limits the use of one variable will likely have strategic consequences for the use of all the others. Using a Hotelling model with vertical differentiation we focus on how trade policy barriers alter price and non-price competition on the goods market. The main results are as follows: first, no matter whether the trade restriction (tariff) is placed on the non-price instrument or on the good itself, the foreign (domestic) firm prefers to increase (decrease) its use of its pricing tool and give up some of (increase) its use of the non-price instrument. Second, in the presence of a non-price instrument, tariffs do not always lead both firms to increase their price: it can lead the foreign firm to decrease its (final) price.     

Empirical study on factors motivating business students to move to the entrepreneurial sector

This exploratory study is attempting to examine how employable individuals turn their focus to start-ups. Today, majority of employees still practice a more or less self-protective strategy. In this paper the authors have reported the results of an empirical study of factors motivating degreed potential employees to move to self-enterprising. The deciding factors to become an entrepreneur and of sustainable employment-oriented factors are analyzed in order to discover how they differ. Participants consisted of 200 students from Malaysia entered final year of business undergraduate and postgraduate programs. Self-administered questionnaires were used to gather data on factors and types of relationships influencing career choice and entrepreneurial intention. The results will serve as a basis for improvement of employment practices and promising entrepreneurial curriculum in universities to support start-ups in creating sustainable businesses.     

Antidumping as a signaling device under the WTO’s ADA non-disclosure clause

Under the WTO Antidumping Agreement (ADA) non-disclosure clause, the investigating AD authority cannot disclose the confidential information it obtains. This paper analyzes how non-disclosure of confidential information leads the government to use the magnitude of the AD duty to signal this information, in casu the costs of the firm under investigation, to the domestic industry. We obtain two main results. First the AD authority sets lower tariffs compared to the full disclosure scenario because it has an incentive to signal that the foreign firm is relatively inefficient. Second, adhering to the non-disclosure clause leads to lower domestic welfare relative to the full disclosure scenario. On the other hand, prices are lower and global welfare is higher under the non-disclosure clause, thus providing an economic rationale for the WTO’s ADA non-disclosure clause.