Anti-dumping protection, price undertaking and product innovation

•We examine how price undertaking policies affect product R&D of firms.•The dumping margin will decline if the products become more differentiated.•Under bilateral antidumping actions, aggregate R&D may increase or decrease.•Under unilateral antidumping action, aggregate R&D definitely declines.

This paper examines how price undertaking policies affect the product investments of firms in an intra-industry trade model. We show that the dumping margin will decline if the products become more differentiated. Under bilateral anti-dumping actions, relative to those under free trade, the aggregate product R&D investment may either increase or decrease, depending on the tolerable dumping margin set by the governments. By contrast, the aggregate product R&D will definitely decline and the products will become less differentiated if only one government implements anti-dumping actions.