Short Notes: Dumping
Posted by Ripon Abu Hasnat on Tuesday, May 27, 2014 | 0 comments
Dumping
is the practices by firms of selling
products abroad at below costs or significantly below prices in the home
market. The former implies predatory;
the latter, price discrimination.
Dumping of both types is viewed by pricing many governments as a form of
international predation, the effect of which may be to disrupt the domestic
market of foreign competitors.
Economists argue, however, that price discriminatory dumping, where
goods are not sold below their incremental costs of production, benefits
consumers of the importing countries and harms only less efficient producers.
Under
the General Agreement on Tariffs and Trade (GATT) rules, dumping is discouraged
and firms may apply to their respective government to impose tariffs and other
measures to obtain competitive relief.
As in the case of or (see discussion under these headings), predatory
pricing selling below costs arguments have been advanced questioning the
economic feasibility of dumping at prices below costs over extended periods of
time.
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