Price dumping
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Price dumping, or just “dumping”, is a kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production. The purpose of this act is sometimes to increase market share in a foreign market or to drive out competition and create monopoly.
This is often referred to as selling at less than “normal value” on the same level of trade in the ordinary course of trade. Under the World Trade Organization (WTO) Agreement, dumping is condemned (but is not prohibited) if it causes or threatens to cause material injury to a domestic industry in the importing country.
The term has a negative connotation, as advocates of competitive markets see “dumping” as a form of protectionism. Furthermore, advocates for workers and laborers believe that safeguarding businesses against predatory practices, such as dumping, help alleviate some of the harsher consequences of such practices between economies at different stages of development.
See also
Game Theory, Race to the bottom, Public goods game, Prisoner’s dilemma, Fiscal dumping, Social dumping, Paradox of competition