Reverse dumping is not the conventional form of dumping. It is the dumping of goods in a reverse manner- dumping or selling the goods at extremely low prices on the domestic market, while selling the same goods at much higher price on the foreign markets. https://efinancemanagement.com/economy/reverse-dumping

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https://efinancemanagement.com/economy/reverse-dumping
Reverse Dumping

2. 1. Meaning
2. Necessary Requisites
3. Advantages
4. Disadvantages
5. Reference
Content

3.  Reverse dumping is not the conventional form of dumping.
 It is the dumping of goods in a reverse manner- dumping or selling the goods at extremely low prices on the domestic
market, while selling the same goods at much higher price on the foreign markets.
 The main purpose of such a form of dumping is to destroy all competition at local level.
 The producer will eventually take the form of a monopoly. He can then raise the prices of his products on the
domestic market at face value or close to foreign markets and sell the products at a profit.
Meaning

4. 1. Price elasticity of demand:
Domestic market should have a very high price elasticity of demand & at the same time, the price elasticity of demand on
foreign markets should be inelastic. Such a situation provides good playing field for the success of reverse dumping.
2. Absence of arbitrage opportunities:
The 2 different markets, national and international, should have significant barriers between them. It should not allow a
consumer to buy the product at a lower price on the domestic market and sell it at a higher price on the foreign market.
3. Well established product:
The brand value should be so strong that consumers do not easily switch to other brands, which will help the
manufacturer to sell these products with higher profit margins in these markets.
4. Absence of substitutes:
The manufacturer should have a monopoly position in those countries and markets & lack of replacement products will
ensure that consumers have no choice and cannot limit their consumption to other products or brand. Hence, they will
have to buy these products at high prices, resulting in high profits for the seller.
Necessary Requisites

5. 5. Absence of government restrictions:
It is possible that competitors from the domestic market turn to the government or anti-competitive bodies that regulate
unfair trading practices against the company’s aggressive sales tactics.
Necessary Requisites

6. Some advantages of reverse dumping are listed below:
• Beneficial for consumers of home country due to availability of cheap products.
• High quality products.
• Increase in sales volumes of producer.
• Large scale production provides advantage of economies of scale.
Advantages

7. The disadvantages of reverse dumping are listed below:
• Destruction of local competitors.
• Aggressive pricing.
• Presence of strong competition disable it to become a monopoly.
• Heavy financial losses.
Disadvantages

8. Reference
To know more about it, click on the link given below:
https://efinancemanagement.com/economy/reverse-dumping