Dumping is the practices by firms of selling products abroad at below costs or significantly below prices in the home market. The former implies predatory; the latter, price discrimination. Dumping
of both types is viewed by pricing many governments as a form of
international predation, the effect of which may be to disrupt the
domestic market of foreign competitors. Economists
argue, however, that price discriminatory dumping, where goods are not
sold below their incremental costs of production, benefits consumers of
the importing countries and harms only less efficient producers.
Under
the General Agreement on Tariffs and Trade (GATT) rules, dumping is
discouraged and firms may apply to their respective government to impose
tariffs and other measures to obtain competitive relief. As in the case of or (see discussion under these headings), predatory pricing selling below costs arguments
have been advanced questioning the economic feasibility of dumping at
prices below costs over extended periods of time.
