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Chapter 21: Q.9 (page 522)

Explain how predatory pricing could be a motivation for dumping.

Short Answer

Expert verified

Selling products at a cheap rate is how predatory pricing could be a motivation for dumping.

Step by step solution

01

Step 1. Meaning 

Predatory pricing - predatory pricing is lowering the price of the product in the least to take maximum market share.

Dumping -Selling goods at an artificial price internationally even below the cost of production.

02

Step 2. Explanation

Here, domestic firms have to match the low prices of imported goods to be competitive, here internally imported products sell goods at lower prices (prices below the cost of production) to take maximum market share and bear the short term losses for monopoly and later rise the prices for long term profits.

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