Tuesday, June 2, 2015

Dumping Office Paper

Today in Global Economics and Business I will be discussing the concept of dumping.  Dumping is when consumer or usually firms in one country accuse firms in another country of "unfairly" pricing import of the good.  Thus firms in country A accuse firms in country B of selling the country B's products at an unfair price in country A.  Dumping can be when prices are either lower in country A than in country B or lower than the production cost of producing the product in country B.  I tend to be very skeptical of the first definition, as there are profit maximizing reasons for country B to sell at a lower price in country A than they sell in country B.  Such as either differences in competition between the two countries or difference in the price elasticities among consumers in the two countries.

In January of this year The Wall Street Journal reported that a number of paper manufacturers asked the US government of impose import duties (taxes) on foreign rivals because they were selling at an unfair price - meaning they were accusing their foreign competitors of dumping office paper and other types of uncoated paper here in the US.

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