Injury Investigations in Antidumping and the Super-Additivity Effect: A Theoretical Explanation

Empirical evidence shows that in injury investigations in antidumping cases conducted by the United States International Trade Commission, the probability of a positive finding is higher when the number of defendant firms is larger, holding constant their total market share. In the paper we offer a theoretical explanation of this finding. We show that the presence of many exporters exacerbates the free-rider problem, which leads every firm to invest less on defense. Thus for the same market share, injury finding is more likely to be positive for many small sellers than a few large sellers. JEL no. F13, L13