In the 1980s, Japanese computer chip manufacturers were accused of dumping in the United States. Explain what this means and discuss why a company would do this.
What will be an ideal response?
Dumping is the sale of an exported product at a price lower than that charged for the same or a like product in the "home" market of the exporter. The practice is regarded as a form of price discrimination that can potentially harm the importing nation's competing industries. Dumping may occur as a result of exporter business strategies that include (1) trying to increase an overseas market share, (2) temporarily distributing products in overseas markets to offset slack demand in the home market, (3) lowering unit costs by exploiting large-scale production, and (4) attempting to maintain stable prices during period of exchange fluctuations.
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