Dumping is the practice of selling a product or service in a foreign market lower than an established "normal price." This is typically done to establish a monopoly or put a competitive threat out of business.
Normal PriceA 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 SupportDumping 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.
ExampleA 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.
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