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. Monopoly

    A situation in which a single company or group owns all or nearly ...
  4. Dumping

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

    A monopoly or a firm within monopolistic competition that has ...
  6. Price Rigging

    An illegal action performed by a group of conspiring businesses ...
Related Articles
  1. Does perfect competition exist in the ...
    Investing

    Does perfect competition exist in the ...

  2. Antitrust Defined
    Personal Finance

    Antitrust Defined

  3. Do Cheap Imported Goods Cost Americans ...
    Economics

    Do Cheap Imported Goods Cost Americans ...

  4. Can Investors Trust Official Statistics?
    Economics

    Can Investors Trust Official Statistics?

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center