American producers often complain about dumping. What is dumping, and should it be prohibited?

Answer 1

Dumping refers to selling exports at a price below what the product sells for in the home country. Consumers should cheer for low prices. Producers are unhappy, since they cannot compete or don't want low prices. We should allow dumping to take advantage of low prices and exporting goods in other industries to the dumper. However, we might also need to take into account the potential for predatory behavior through product dumping. If foreign producers sell products in the U.S. for an unreasonably low price, perhaps below their own cost, they could force competing U.S. producers out of business. Once the U.S. competition is eliminated, the foreign producers would be likely to exercise monopoly power and raise their prices.