Dumping

Dumping occurs when companies sell products in foreign markets at “export prices” lower than their “normal values” (i.e., fair values). From an economic standpoint, it is a form of price discrimination that offers opportunities for firms to increase profits, so long as they can control prices, separate markets, and prevent product resale from relatively low-priced markets to relatively high-priced ones. From an ethical standpoint, dumping is considered by many, but not all, to be unfair because it unjustly reduces domestic companies’ sales, employment, market share, cash flows, [Page 992]profitability, and the ability to raise capital. Government investigations seek to identify cases in which dumping causes or threatens to cause material injury to domestic industries. Once identified, remedies are usually trade restrictions or agreements that raise ...