Dumping - meaning, definition, types of dumping

1. DUMPING
Dr. A. Jeyanthi, GACW, Tiruchendur
1

2. Dumping
Meaning
Discriminatory monopoly pricing in foreign trade is described as “dumping”. It implies
different prices in the domestic and foreign markets.
Dumping refers to the practice in which the home producers sell their products in the
foreign market at a very low price which is even less than the cost of production.
Dumping is a process where a company exports a product at a price lower than the
price it normally charges on its own home market.
2

3. Definition
Haberler defines dumping as “The sale of a good abroad at a price which is lower than
the selling price of the same good at the same time and in the same circumstances at home
taking account of differences in transport costs”.
According to Jacob Viner, dumping refers to the process of selling the same product
in two different markets at two different prices.
3

4. Different forms of Dumping / Kinds of Dumping
1. Direct dumping
2. Reverse dumping
3. Sporadic dumping
4. Predatory dumping
5. Persistent dumping
6. Differential Dumping
7. Intermittent dumping
4

5. 1. Direct dumping
When the price of the same product is low in the foreign market than in the domestic
market, it is known as direct dumping.
Direct dumping is the result of more inelastic demand in the domestic country and
more elastic demand in the foreign market for the product.
5

6. 2. Reverse dumping
When the price of the same product is low in the domestic market than
in the foreign market, it is known as reverse dumping.
6

7. 3. Sporadic Dumping (Short-term dumping)
It is motivated by the desire to get rid of the inventory stocks which are unsold in
the home market. It is adopted to dispose of a casual stock.
When the producer is unable to sell the excess stock in the home market, he will
sell that excess stock in the foreign market at a very low price. It is called sporadic
dumping.
7

8. 4. Predatory Dumping
Predatory dumping is adopted to ruin rival firms and to achieve monopoly power by
selling at a loss in the foreign market.
It is selling at a loss abroad as measured by the average cost and not by marginal cost
of production.
The objective of predatory dumping is to get a footing in the foreign market by
weakening the rival firms. After capturing the market, there is a wide increase in the price.
8

9. 5. Persistent Dumping (Long term Dumping)
It occurs when a producer consistently sells his goods at lower
price in one market than in other. It is adopted on a long term basis. Its
basic goal is to facilitate large-scale production.
9

10. 6. Differential Dumping
When the advantage of different demand elasticity in
different export market is taken by the seller, this is known as
“differential dumping”.
10

11. 7. Intermittent dumping
It is adopted to maintain a foothold in the market or to
develop goodwill in a new market.
11

12. Thank you
12