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#1
03-20-2007, 06:26 PM
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Dumping.
Why are some people against dumping? How is it unfair competiiton?
If person B sells ham at 10 dollars, and I sell my ham at 5 dollars , make the other guy go broke then sell my ham at 15 dollars I will atract competition. I dont see how the price of my ham will stay at 15 dollars on the long run, am I overlooking something obvious? 
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#2
03-20-2007, 06:35 PM
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Re: Dumping.
[ QUOTE ]
Why are some people against dumping? How is it unfair competiiton? If person B sells ham at 10 dollars, and I sell my ham at 5 dollars , make the other guy go broke then sell my ham at 15 dollars I will atract competition. I dont see how the price of my ham will stay at 15 dollars on the long run, am I overlooking something obvious? [/ QUOTE ] The threat of dumping creates a barrier to entry. The $15 "should" attract competition, but competitors will be reluctant to enter when they know you will match or beat any price they offer.
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#3
03-20-2007, 08:07 PM
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Re: Dumping.
[ QUOTE ]
Why are some people against dumping? How is it unfair competiiton? If person B sells ham at 10 dollars, and I sell my ham at 5 dollars , make the other guy go broke then sell my ham at 15 dollars I will atract competition. I dont see how the price of my ham will stay at 15 dollars on the long run, am I overlooking something obvious? [/ QUOTE ] In the real world, developing a product costs a lot more than getting a pig and slaughtering it. If it costs millions or even billions of dollars to develop something, and there is a great likelyhood that someone will undercut my prices, why would I enter such a market?
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#4
03-20-2007, 08:59 PM
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Re: Dumping.
[ QUOTE ]
[ QUOTE ] Why are some people against dumping? How is it unfair competiiton? If person B sells ham at 10 dollars, and I sell my ham at 5 dollars , make the other guy go broke then sell my ham at 15 dollars I will atract competition. I dont see how the price of my ham will stay at 15 dollars on the long run, am I overlooking something obvious? [/ QUOTE ] In the real world, developing a product costs a lot more than getting a pig and slaughtering it. If it costs millions or even billions of dollars to develop something, and there is a great likelyhood that someone will undercut my prices, why would I enter such a market? [/ QUOTE ] You would do it if you thought your manufacturing technique would be lower average cost than the existing market players. It would not be hard to get venture capital to develop and support your enterprise if it really was better. Liquidity in the capital markets helps this process along tremendously. Even if you can't compete so well on average cost, you can attempt to differentiate your product so long as the product isn't too commoditized. The only products where predatory pricing (selling at below average cost) *might* be a concern are highly commoditized products with a pre-existing highly efficient manufacturer. Does anyone know of examples of predatory pricing?
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#5
03-20-2007, 09:34 PM
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Re: Dumping.
[ QUOTE ]
[ QUOTE ] Why are some people against dumping? How is it unfair competiiton? If person B sells ham at 10 dollars, and I sell my ham at 5 dollars , make the other guy go broke then sell my ham at 15 dollars I will atract competition. I dont see how the price of my ham will stay at 15 dollars on the long run, am I overlooking something obvious? [/ QUOTE ] In the real world, developing a product costs a lot more than getting a pig and slaughtering it. If it costs millions or even billions of dollars to develop something, and there is a great likelyhood that someone will undercut my prices, why would I enter such a market? [/ QUOTE ] because I can buy the stuff of person B at a very low cost because it will go on auction?
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#6
03-20-2007, 09:56 PM
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Re: Dumping.
BCPVC had a very good post a few weeks ago that outlined five or six solid reasons why predatary pricing is not an effective means of competition for the bigger, established businesses. I'll try to find it, I should probably put it in the faq, it's really good.
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#7
03-20-2007, 10:06 PM
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Re: Dumping.
[ QUOTE ]
[ QUOTE ] [ QUOTE ] Why are some people against dumping? How is it unfair competiiton? If person B sells ham at 10 dollars, and I sell my ham at 5 dollars , make the other guy go broke then sell my ham at 15 dollars I will atract competition. I dont see how the price of my ham will stay at 15 dollars on the long run, am I overlooking something obvious? [/ QUOTE ] In the real world, developing a product costs a lot more than getting a pig and slaughtering it. If it costs millions or even billions of dollars to develop something, and there is a great likelyhood that someone will undercut my prices, why would I enter such a market? [/ QUOTE ] because I can buy the stuff of person B at a very low cost because it will go on auction? [/ QUOTE ] I have no idea what you are talking about here. Why would someone invest millions of dollars into developing a product that a well-established competitor will simply drop the price of their product and prevent me from making any money? What does this have to do with auctions?
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#8
03-20-2007, 10:23 PM
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Re: Dumping.
When B goes broke, the factories will still be there, those facotries will go on auction. Thereby if C buys that factory he will be in condition to compete with me , in spite of me deciding to lower my prices.
Do you have any example where a company used predatory pricing and then the raised the prices affecting the consumers?
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#9
03-20-2007, 10:30 PM
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Re: Dumping.
[ QUOTE ]
When B goes broke, the factories will still be there, those facotries will go on auction. Thereby if C buys that factory he will be in condition to compete with me , in spite of me deciding to lower my prices. Do you have any example where a company used predatory pricing and then the raised the prices affecting the consumers? [/ QUOTE ] Why would C buy the factories if you're just going to undercut him? Obviously the factory is capable of producing ham at $10 and not lower, otherwise B wouldn't be out of business.
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#10
03-20-2007, 10:43 PM
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Re: Dumping.
[ QUOTE ]
[ QUOTE ] When B goes broke, the factories will still be there, those facotries will go on auction. Thereby if C buys that factory he will be in condition to compete with me , in spite of me deciding to lower my prices. Do you have any example where a company used predatory pricing and then the raised the prices affecting the consumers? [/ QUOTE ] Why would C buy the factories if you're just going to undercut him? Obviously the factory is capable of producing ham at $10 and not lower, otherwise B wouldn't be out of business. [/ QUOTE ] Wait, is someone actually arguing that there's a problem with the less efficient competitor being put out of business?
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