This paper analyzes the incentives to petition for anti-dumping protection in the context of anti-dumping retaliation. We examine how anti-dumping retaliation may arise and whether such retaliation can be a threat that dissuades a domestic firm facing dumping from first petitioning for anti-dumping protection. The findings show that the anti-dumping duty imposed by the domestic country may result in dumping in the foreign country. Under such a circumstance, the foreign firm will petition for anti-dumping protection, and thus anti-dumping retaliation arises. We further show that firms facing foreign retaliation still have the incentive to first petition for anti-dumping protection. Finally, we investigate the welfare effects of a domestic anti-dumping duty in the context of a threat of foreign antidumping retaliation. We note that it may be socially desirable for the domestic country to implement an anti-dumping duty on a foreign dumping firm.
