Predatory Dumping

AAA

DEFINITION of 'Predatory Dumping'

A type of anti-competitive event in which foreign companies or governments price their products below market values in an attempt to drive out domestic competition. This may lead to conditions where one company has a monopoly in a certain product or industry. Antitrust or competition laws forbid predatory dumping in many countries such as the U.S. and the European Union.

Also referred to as "predatory pricing".

INVESTOPEDIA EXPLAINS 'Predatory Dumping'

For example, suppose there are two companies selling identical products; company Y is a domestic firm and company X is a foreign firm. Company X wants to drive company Y out of the market, so it prices its product far below the cost of producing it. Company Y must compete by lowering its prices, which eventually causes the company to lose money and exit the market.

RELATED TERMS
  1. The Celler-Kefauver Act

    A 1950 refinement of previous antitrust legislation dealing primarily ...
  2. Anti-Dumping Duty

    A protectionist tariff that a domestic government imposes on ...
  3. Foreign

    1. A non-U.S. company with securities trading on the North American ...
  4. Dumping

    In international trade, the export by a country or company of ...
  5. Antitrust

    The antitrust laws apply to virtually all industries and to every ...
  6. Monopoly

    A situation in which a single company or group owns all or nearly ...
Related Articles
  1. Investing

    Does perfect competition exist in the real world?

    First, let's review what economic factors must be present in an industry with perfect competition: 1. All firms sell an identical product. 2. All firms are price-takers. 3. All firms have a relatively ...
  2. Personal Finance

    Antitrust Defined

    Check out the history and reasons behind antitrust laws, as well as the arguments over them.
  3. Economics

    Do Cheap Imported Goods Cost Americans Jobs?

    Flooding the market with cheap products can mean job losses and even market collapse - but dumping isn't as threatening as it seems.
  4. Economics

    Can Internet companies be vertically integrated?

    Find out how online businesses are beginning to take advantage of vertical integration for many of the same reasons as traditional businesses.
  5. Taxes

    Can you write variable costs off your taxes?

    Learn if you can deduct variable or fixed costs from your business taxes and learn more about business deductions, cost of goods sold and gross profit.
  6. Investing Basics

    What is the effect of price inelasticity on demand?

    Find out why price inelasticity of demand shows the relationship between demand and price if the price of an inelastic good is either lowered or raised.
  7. Options & Futures

    What is the difference between inelasticity and elasticity of demand?

    Find out how elasticity of demand and inelasticity of demand are two sides of the same coin, based on the calculated elasticity quotient.
  8. Economics

    Will the consumer price index (CPI) be updated or revised in the future?

    Learn about the consumer price index (CPI) and understand how its purpose and calculation make it necessary to continually update and revise it.
  9. Economics

    Does the consumer price index (CPI) correlate with the change in price of goods and services?

    See why the consumer price index is a questionable proxy for inflation, and why it is unlikely to represent experiences with price changes accurately.
  10. Personal Finance

    Do minimum wage laws make labor a fixed or variable cost?

    Find out why labor is a classified as a semi-variable cost by the minimum wage laws; labor has elements of both fixed costs and variable costs.

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center