While conventional wisdom is that dumping is selling at a loss, this is not necessarily the case. Dumping is exporting a product at a lower price than that charged on the home market (the dumping margin (see Glossary)). As a result, a company may be making money on the export of a product, but if it is making a greater profit on its home market than it is making on a foreign market, it may be dumping. A company may engage in dumping as part of a deliberate strategy (for instance, it may be protected from competition on its home market and may use this advantage to push competitors out of other markets). Alternatively, price differences between domestic and imported products may be explained by different demand curves or other normal business behaviour. Either way, dumping can affect competition in markets that import these lower priced products, and has the potential to eliminate local competitors.
Antitrust and Trade Regulation
Date of this Version
Natalie McNelis, "The rise of anti-dumping, Effects on business" (October 2004). Wilmer Cutler Pickering Hale and Dorr Antitrust Series. Working Paper 42.