Dumping occurs when a country or company exports a product at a price that is lower in the foreign importing market than the price in the exporter’s domestic market. The biggest advantage of dumping is the ability to flood a market with product prices that are often considered unfair.

Why is it a bad thing? Dumping is a form of unfair competition as products are being sold at a price that does not accurately reflects their cost. It is very difficult for European companies to compete with this and in the worst cases can lead to firms closing and workers losing their job.

Dumping can lead to lower prices for consumers, can force stagnant companies to become more competitive and innovative, and can allow exporting companies to increase revenues by selling more product. In worst-case scenarios, it could lead to monopolies, where consumers are worse off in the long-run.

Dumping affects the exporting country in the following ways: When domestic consumers have to buy the monopolistic commodity at a high price through dumping, there is loss in their consumers’ surplus. As a result, the price of the commodity will be less than the monopoly price without dumping.

Dumping is unfair if it undercuts domestic producers and so forces them out of business. It’s similar in a way to predatory pricing. Introducing quotas, i.e. physical limits on the volumes of goods that can be imported (dumped or otherwise), will reduce dumping.

Dumping is when a company sells its export products at a lower price than it charges in its domestic market. Many trade agreements between nations include anti-dumping provisions. Example. Imagine that a fictional company, Acme Soda, is entering the market in the make-believe country of Buransa.

The objective of dumping is to increase market share in a foreign market by driving out competition and thereby create a monopoly situation where the exporter will be able to unilaterally dictate price and quality of the product.

An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. While the intention of anti-dumping duties is to save domestic jobs, these tariffs can also lead to higher prices for domestic consumers.

throwing something away

What is another word for dumping?