But there are powerful reasons to resist the dumping argument for protection. First, it is virtually impossible

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But there are powerful reasons to resist the dumping argument for protection. First, it is virtually impossible to detect dumping because it is hard to determine a firm’s costs. As a result, the test for dumping is whether a firm’s export price is below its domestic price. This test is a weak one because it can be rational for a firm to charge a lower price in markets in which the quantity demanded is highly sensitive to price and a higher price in a market in which demand is less price-sensitive.

Second, it is hard to think of a good that is produced by a single firm.

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Foundations Of Microeconomics

ISBN: 9780134491981

8th Edition

Authors: Robin Bade, Michael Parkin

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