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Advantages And Disadvantages Of Trade Dumping

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Dumping which a form of price discrimination is a process in which a country exports a product at a price that is much lower in the foreign market than the price charged in the domestic market. Dumping mostly involves extensive export volumes of the product, so it has a chance of jeopardizing the financial situation of producers of the product in the importing country. Dumping can be figured out by comparing the sales price of a commodity in the home market and the price listed in the market where it is imported. Trade dumping is considered intentional in nature in that the main purpose is to capture an advantage within the market that imports the goods.1 Advantages of Trade Dumping The obvious advantage of trade dumping is the ability to inject the market with product prices often considered as unjust. The exporting country may offer the manufacturer a subsidy to compensate the losses that are experienced, when the products are sold at a price far below the actual costs accompanying with production of the good. Disadvantages of Trade Dumping Trade dumping can be costly to maintain over time. This is significant in the case of low selling price which is being existing on the good as well as the costs involved in the activity by subsidizing it, …show more content…

Predatory dumping is also called recurrent dumping. It involves sale of goods or commodities in world markets at a price lower than the home price. This is equivalent to selling a product at a price which incurs loss to gain access to a market and eliminate competition as the main purpose of it is to kill the competition and capture the market by inflicting losses to the rivals to force them out. When the competition is wiped out, the company becomes a monopolist. The position and power is then used to charge a price in favor of the monopolistic firm. However, the risk of former competitors rejoining the market because of high profit margins still

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