AP Business Guidelines- Dumping

According to the AP Stylebook Business Guidelines section, dumping is: "The selling of a product in a foreign market at a price lower than the domestic price. It is usually done by a monopoly when it has such a large output that selling entirely in the domestic market would substantially reduce the price."

An example of the verb was used in the article, "Investors succumb to fears of recession," found at The Wall Street Journal's website. The article said: "Charles Smith, a retired former International Business Machines Corp. marketing manager, hasn't dumped stocks since the 1987 stock-market crash. But, angry about the state of corporate America and worried about the economy, he is selling stocks, getting out of his index funds and going entirely into cash." http://online.wsj.com/article/SB122333567578609541.html

While Smith is not a monopoly as suggested in the definition of dumping, it is implied that he is selling all of his stocks to a foreign market at a lower price then they are worth because their value is rapidly decreasing in the U.S.

This practice by monopolies is considered dangerous to the foreign country they trade with. Because the goods are priced lower, the people from the foreign country begin to buy the cheaper goods rather than their more expensive domestic goods. Ultimately this can run a domestic company out of business, giving the foreign company a opportunity to later increase prices. More information about dumping and anti-dumping laws can be found at, http://www.freetrade.org/node/222.

Example: The U.S Steel Co. dumped all of their steel on France, increasing the consumption of U.S steel in France and decreasing the consumption of domestic French steel, creating a U.S Steel Co. monopoly in France.