Persistent dumping is an unfair trade practice which includes selling goods at a very low price in foreign market and at a high price in domestic market. The purpose of such form of dumping is to create a presence and a substantial market share gradually in foreign markets. https://efinancemanagement.com/economy/persistent-dumping

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https://efinancemanagement.com/economy/persistent-dumping
Persistent Dumping

2. 1. Meaning
2. Pre-requisite for Persistent Dumping
3. Merits
4. Limitations
5. Reference
Content

3.  Persistent dumping is an unfair trade practice which includes selling goods at a very low price in foreign market and at
a high price in domestic market.
 The purpose of such form of dumping is to create a presence and a substantial market share gradually in foreign
markets.
 It establish its products in foreign markets with the help of low prices and fight and beat the competition by means of
creating a price war. And finally, become a monopoly power in the region.
 This strategy lasts for a long term, maybe a number of months or even years.
Meaning

4. 1. Constant demand of the product:
Products should have a constant demand in the countries in which these are dumped. Persistent dumping is effective only
when there is a constant demand. Temporary demand for a product will create a short-term phenomenon which will go
against the basic principle of persistent dumping, that it is long-term in nature.
2. Price-elasticity of product:
The demand for the product should have a strong positive relationship with the price which means the demand will
increase with a fall in price. The company can lower its prices to gain a larger market share in the foreign country.
3. How pricing is decided:
They charge only what they actually incur for producing one extra unit of that product in the foreign region. To early
capture the market, the companies may decide to lower the prices even below the marginal cost of the product.
Pre-requisite for Persistent Dumping

5. 1. Rock bottom prices:
The consumers of foreign countries are able to get products at rock-bottom prices because the dumping company usually
sells these products at their marginal cost.
2. Healthy competition and innovation:
Persistent dumping leads to the growth of healthy competition and innovation in the region. As it is long-term in nature,
the local competitors get time to make strategies to fight the foreign competition.
3. Specialization and economies of scale:
Large-scale production for sale in domestic as well as foreign countries results in a lower cost of production. Companies
are able to implement new technology due to their high scale of production.
Merits

6. 1. Unworthy in long run:
Selling goods at marginal pricing may prove burdensome on the financial health of the company over time. Domestic
companies from the country where the products were being dumped may slowly stand up to the challenge.
2. Disruption of local competition:
Aggressive selling of goods at rock-bottom prices leads to the destruction of small companies and producers. They are
forced to close down their businesses because they are unable to match the prices and consumers no longer buy their
products.
3. Import duties, tariffs and restrictions:
Imposition of import duties and tariffs by the country where the products are being dumped will raise the price of those
goods automatically. It will dent the very purpose of capturing the foreign markets.
Limitations

7. Reference
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https://efinancemanagement.com/economy/persistent-dumping