Dumping

Dumping
See also
Price strategy to eliminate competitors Bargaining power of buyers Monopson Resale price maintenance Discount pricing Decreasing cost industry Cost advantage Selective distribution Joint demand

Dumping is the sale of products exported at prices lower than their production cost or at prices below the same or similar products offered on the domestic market. Dumping is the dangerous practice, threatening the domestic industry.

Types

There are three kinds of dumping:

• Sporadic dumping - this is a sporadic selling of products abroad at prices below production costs. Results from emergency situations, such as a sharp drop in demand in the domestic market or an exceptional harvest in a given year.
• Predatory dumping - aims to capture some of the market and eliminate competition by offering prices below the cost of production. Competitive enterprises using predatory dumping will become a monopolist on the market, after that it raises prices in order to pursue monopolistic profit.
• Constant dumping - sale of goods to foreign markets at a price lower than the market national level. It is used when the demand for the given commodity on the domestic market is much less flexible than in the foreign market. In this case, the manufacturer can sell goods at relatively high prices on the domestic market (especially when there are restrictions on the import of this good).

References

• Kostecki, M. M. (1991). Marketing strategies between dumping and anti-dumping action. European Journal of Marketing, 25(12), 7-19.