What does the term 'dumping' refer to in international trade?

The term 'dumping' in international trade specifically refers to the practice of selling goods in a foreign market at a price that is lower than the price charged in the domestic market. This strategy is often used by companies to gain market access and increase market share in a foreign country, appealing to consumers with lower prices than local competitors can offer.

By offering goods at such reduced rates, the exporting company can capture consumers' attention and potentially drive local competitors out of business or create a dependency on their products. This practice can be controversial and may lead to accusations of unfair trade practices, prompting countries to impose anti-dumping duties to protect their domestic industries from being undermined by these lower-priced imports. Understanding this concept is crucial for grasping international trade dynamics and the implications of pricing strategies across borders.