2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
The dumping price finds its application in the world market in competition instead of trade restrictions. This economic concept is one of the most striking manifestations of competition in this field of activity. This practice was widely used in the 30s of the 20th century. It was a period of a rather serious crisis in the economy with sales problems and increased competition in the global market.
Definition
Price dumping is the sale of any product abroad at a cost that is lower than its usual rate. This economic situation can cause significant material damage to the industry that was created on the territory of the importing state.
The "regular price" referred to is the value of the product-analogue, at which it is sold in the state where it is produced, under the normal development of all trade operations.
An analogue product means a type of product that hascharacteristics similar to the specimens in question.
Calculation of the regular or normal price
If there is no intrinsic value of a product, the regular price is determined by the highest value of its counterpart intended for export to another country. Also, this indicator can be calculated as the sum of production costs with the addition of a reasonable amount of costs for the sale. Thus, the dumping price uses the calculation of its usual indicator, taking into account the natural and acquired competitive advantages of exporters of this type of product. Such advantages are expressed in the cost of energy resources, the location of production, the availability of independent sources of raw materials, as well as advanced technologies.
Knowing property damage
Dumping price is always accompanied by material damage, which is evidence of the adverse economic consequences of importing goods at a disadvantageous value. Such negative factors occur for those industries whose finished products compete with goods imported at specified prices.
Spheres of use of dumping
Dumping price can be used through:
- commercial sector resources;
- government subsidies provided to exporters.
Commercial practice of economic activity involves the use of such varieties of dumping:
- permanent exportbelow normal price;
- occasional - temporary occasional sale of goods on the international market at low cost due to the large accumulation of stocks of goods from exporters;
- reverse, providing for the sale of goods on the domestic market of the state at a cost lower than the export value (such price dumping is used in case of significant fluctuations in exchange rates).
Dumping price in public procurement is not only a deliberate reduction in the cost of selling goods, but it is also a certain discrimination in this area, in which they are significantly underestimated in one market while being sold at high analogues in another. Thus, the use of dumping is associated with the monopolization of markets and the use of unreasonably high prices.
Economic prerequisites for the use of dumping
The formal economic prerequisite for the implementation of dumping in practice is the difference in price elasticity of demand for a particular type of product in foreign and domestic markets. So, if this indicator is not achieved by the domestic market of the corresponding coefficient of the foreign market, there is a fluctuation both towards an increase and towards a decrease in prices to a lesser extent in the domestic market. Therefore, in this case, there is more overseas expansion than domestic contraction.
Dumping makes it possible to ensure, first of all, the benefit to the exporting company, which has the opportunity to increase its share in the international market. At the same time, they compensatecosts associated with price competition in the domestic market. Thus, the total sales increase, and this firm can receive additional profit.
Summing up what has been said in this article, it should be noted - when determining what a dumping price is, it is indicated - with a fairly successful use of the moment, exporters can receive significant income.
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