Normal Price
A normal price can refer to a typical "fair value" in a nation over a period of time. The prices charged by a firm in their domestic market and other international markets are also considerations.Government Support
Dumping isn't necessarily barred by trade agreements but it is viewed negatively. In many cases, a government or trade organization will take action against dumping if it is damaging the industry of a nation. Dumping is particularly damaging if it is supported by a government with payments such as subsidies.Example
A firm sells widgets for $2 in their own market and $1.80 in most international markets. Their strongest competition is in Germany where they sell the widgets for $0.30. It is likely this price is aimed at damaging competitors in Germany as opposed to being viewed as a fair value for the product.Counterexample
Foreign firms may be accused of dumping simply because domestic firms can't compete with their prices. This can be viewed as a type of protectionism whereby dumping is used as an excuse to protect firms that can't match the costs of the foreign competition.| Overview: Dumping | ||
Type | ||
Definition | The practice of selling a product or service in a foreign market lower than an established "normal price." | |
Related Concepts | ||
