Dumping

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.