Many U.S. industries feeling the pinch from foreign rivals have turned to Uncle Sam for relief. They ask the Commerce Dept. to investigate whether foreign companies are dumping imports at prices below market value--presumably in an attempt to drive their U.S. competitors out of business.
On occasion, the government rules in favor of the domestic industry. But it turns out that the mere filing of an antidumping suit is often enough to provide relief for domestic producers. That's the finding of a study by Robert W. Staiger of the University of Wisconsin and Frank A. Wolak of Stanford University. The researchers, writing in the Brookings Papers on Economic Activity, contend that investigations--and the threat of duties--often prompt importers to reduce shipments, raise prices, or do both. Using data on U.S. antidumping petitions filed from 1980 to 1985, the economists estimate imports fell while the U.S. government was investigating the dumping charge by roughly half the amount that would be expected if duties had been imposed from the start of the investigation.
And don't think the preemptive effect of these suits is lost on U.S. producers. Staiger and Wolak say some cases seem "driven largely by a desire to secure the trade-restricting effects generated by the investigative process itself."