Answered: Why is dumping so popular? Oddly…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Question

Why is dumping so popular? Oddly enough, the WTO has a hard time prohibiting it.

Expert Solution

Introduction

Dumping is an international trade concept. In this exporters export their goods to a foreign country and sell them at a price lower their domestic price. Essentially, exporters "dump" their prices to create competition with producers and sellers of the foreign country i.e. Importing country.

Advantages

The biggest reason for its popularity is the fact that producers can flood new or old markets with extremely low priced goods.
It is beneficial for the exporters because of the various subsidies provided to them by the governments.
The exporter can bring in employees from their domestic country to the foreign country and create employment.
This employment generation leads to exporters becoming industry leaders.
For the consumers, dumping helps by lowering the prices of the good and helps enable easy access to the product.

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