A repeated strategy for dumping

Abstract

In this work, we study the phenomena of dumping in a duopoly market through an infinitely repeated game. We consider two firms of different countries competing in the same country. When both firms are cooperating, if the foreign firm deviates from cooperation this can be interpreted as dumping and a period of punishment can be imposed to the foreign firm. After this, firms can play continuously the deviation-punishment game or compete à la Cournot. Previously, we observe that the repeated strategy of deviation-punishment is not adopted in the case of symmetric demand equations. Here, we observe that this strategy of repeated dumping can appear as the best repeated strategy when the demand equations are non-symmetric. © Springer-Verlag Berlin Heidelberg 2016.