Question

1. What is dumping? What is the effect of imposing anti-dumping duties? Does the importing country gain overall?

Answer 1

When a nation in the market is exporting the goods in a market at a price less than the average variable cost of producing those goods in the market, then it is considered as dumping, Anti dumping duty will increase the tariff in that particular goods and bring it at par with the production cost in the local market, this is to protect the local industries from the predatory effect on dumping.

When an anti dumping duty is imposed the price of the goods in the market increase and at a higher price the consumer surplus in the market will fall and producer surplus will increase, with anti dumping duty the increwsaed producer surplus is important to provide a competitive environment because in the long run, dumping will completely destroy the local production in the market. A higher tariff here ensure the surviability of the local industries.

Yes, the overall gain is there because the importing nation can gain some consumer surplus and also revenue for the government is high if the dumping was very predatory.