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Dumping is a discrimination of markets using different prices.
There are various types of dumping, but we will investigate the
most problematic one: persistent dumping.
If a firm has a protected domesitc market, it will behave as
a monopolist in the market, and a competitor in the world market.
When it sells one more unit, it will compare MR from the domestic
market and the world market, and choose the higher.
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We show the domestic MR as MR
and the world market MR as MRW that is the same as the world price
PW.
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Now MR > MRW up to the point G.
Therefore, it will sell Q4 units in the domestic market
with a price of P'd.
After that point, it will sell the good in the world market up
to the point F where MRW=MC.
Thus it exports Q2 - Q4.
(1)
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Autarky APdB
(2)
(3)
(4)
(6)
(7)
