Comments on: Fair trade vs. free trade: the problem with “dumping” http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/ for students and teachers of Economics Wed, 08 Feb 2012 23:39:55 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: abredee http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-19437 abredee Sun, 04 Dec 2011 22:42:58 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-19437 I agree with your last point, but does it undermine comparative advantage. I believe it does not. I agree with your last point, but does it undermine comparative advantage. I believe it does not.

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]]> By: abredee http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-19436 abredee Sun, 04 Dec 2011 22:41:43 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-19436 1.Why would a country want to keep cheap imports out of its domestic markets? Don’t cheap goods make consumers happy? Although cheap imports benefit domestic consumers they harm domestic producers. If domestic producers cannot compete with the cheap prices from abroad they will have to reduce average production costs or shut down as a consequence they will have to fire workers. Thus overly cheap imports can lead to unemployment and thus harm domestic economy. 2.Does dumping refer to the sale of a country’s goods below the importing country’s costs of production or the costs of production in the country where the good is made? Why does this distinction matter? It refers to the sale of a country’s goods below the cost of production in the country where it is made. This distinction matters because the principles of comparative advantage and thus the gains from trade will be eliminated. 3.When a nation protects its domestic market from dumping, is the principle of comparative advantage being undermined? Discuss. No because a country which dumps products may not actually have comparative advantage. It may produce with more production and opportunity costs than the country the good is dumped to but simply understates the goods value. 1.Why would a country want to keep cheap imports out of its domestic markets? Don’t cheap goods make consumers happy?
Although cheap imports benefit domestic consumers they harm domestic producers. If domestic producers cannot compete with the cheap prices from abroad they will have to reduce average production costs or shut down as a consequence they will have to fire workers. Thus overly cheap imports can lead to unemployment and thus harm domestic economy.
2.Does dumping refer to the sale of a country’s goods below the importing country’s costs of production or the costs of production in the country where the good is made? Why does this distinction matter?
It refers to the sale of a country’s goods below the cost of production in the country where it is made. This distinction matters because the principles of comparative advantage and thus the gains from trade will be eliminated.
3.When a nation protects its domestic market from dumping, is the principle of comparative advantage being undermined? Discuss.
No because a country which dumps products may not actually have comparative advantage. It may produce with more production and opportunity costs than the country the good is dumped to but simply understates the goods value.

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]]> By: woverhauser http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-18298 woverhauser Tue, 25 Oct 2011 13:58:49 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-18298 @Ozge But comparative advantage is the argument behind free trade, isn't it? @Ozge

But comparative advantage is the argument behind free trade, isn't it?

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]]> By: woverhauser http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-18297 woverhauser Tue, 25 Oct 2011 13:56:34 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-18297 • Why would a country want to keep cheap imports out of its domestic markets? Don’t cheap goods make consumers happy? The cheap goods might make consumers happy, but the domestic industry that produces those goods will not be happy. Unable to compete with the lower prices, the workers might become unemployed. • Does dumping refer to the sale of a country’s goods below the importing country’s costs of production or the costs of production in the country where the good is made? Why does this distinction matter? The importing country's costs of production. This is an important distinction because if the dumped goods were sold at a price greater than the importing country's costs of production, then the domestic industry would be able to compete and stay healthy. The costs of production for the country where the goods are made is more or less irrelevant, except that it should be less than the importer's. • When a nation protects its domestic market from dumping, is the principle of comparative advantage being undermined? Discuss. It is undermining the principle of comparative advantage, but for a good reason. Protecting domestic markets may lower the possible consumption for consumers, but the workers will still have jobs. • Why would a country want to keep cheap imports out of its domestic markets? Don’t cheap goods make consumers happy?

The cheap goods might make consumers happy, but the domestic industry that produces those goods will not be happy. Unable to compete with the lower prices, the workers might become unemployed.

• Does dumping refer to the sale of a country’s goods below the importing country’s costs of production or the costs of production in the country where the good is made? Why does this distinction matter?

The importing country's costs of production. This is an important distinction because if the dumped goods were sold at a price greater than the importing country's costs of production, then the domestic industry would be able to compete and stay healthy. The costs of production for the country where the goods are made is more or less irrelevant, except that it should be less than the importer's.

• When a nation protects its domestic market from dumping, is the principle of comparative advantage being undermined? Discuss.

It is undermining the principle of comparative advantage, but for a good reason. Protecting domestic markets may lower the possible consumption for consumers, but the workers will still have jobs.

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]]> By: Muhammet Emin Uylas http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-18029 Muhammet Emin Uylas Tue, 18 Oct 2011 21:33:00 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-18029 @Muhammet Murat Sekban I agree with your definitions and comments but I think that you should explain your comments with some examples. @Muhammet Murat Sekban

I agree with your definitions and comments but I think that you should explain your comments with some examples.

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]]> By: Muhammet Emin Uylas http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-18028 Muhammet Emin Uylas Tue, 18 Oct 2011 21:29:12 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-18028 1. Why would a country want to keep cheap imports out of its domestic markets? Don’t cheap goods make consumers happy? Cheap imports affecting domestic markets in a bad way because they cannot compete with cheap imports so their profit becoming less so a country want to keep cheap imports out of its domestic markets. Consumers may satisfied by cheap goods but it is affecting domestic firms in a bad way so domestic economy affecting in a bad way by cheap imports so a country want to keep cheap imports out of country. For example, in Turkey there are lots of cheap good came from China and government try to reduce them in order to protect domestic markets. 2. Does dumping refer to the sale of a country’s goods below the importing country’s costs of production or the costs of production in the country where the good is made? Why does this distinction matter? It refers to the sale of a country’s goods below the importing country’s costs of production, because if there was no distinction matter, it will be free trade and there won’t be dumping. There is this distinction because for example China has big labour force so it can easily produce goods at lower costs so when it export its goods to other country there can be dumping. 3. When a nation protects its domestic market from dumping, is the principle of comparative advantage being undermined? Discuss. Yes it is undermined because consumers won’t be able to buy goods at lower prices but also it is necessary to protect domestic market because they important for economic growth of country. 1. Why would a country want to keep cheap imports out of its domestic markets? Don’t cheap goods make consumers happy?

Cheap imports affecting domestic markets in a bad way because they cannot compete with cheap imports so their profit becoming less so a country want to keep cheap imports out of its domestic markets. Consumers may satisfied by cheap goods but it is affecting domestic firms in a bad way so domestic economy affecting in a bad way by cheap imports so a country want to keep cheap imports out of country. For example, in Turkey there are lots of cheap good came from China and government try to reduce them in order to protect domestic markets.

2. Does dumping refer to the sale of a country’s goods below the importing country’s costs of production or the costs of production in the country where the good is made? Why does this distinction matter?

It refers to the sale of a country’s goods below the importing country’s costs of production, because if there was no distinction matter, it will be free trade and there won’t be dumping. There is this distinction because for example China has big labour force so it can easily produce goods at lower costs so when it export its goods to other country there can be dumping.

3. When a nation protects its domestic market from dumping, is the principle of comparative advantage being undermined? Discuss.

Yes it is undermined because consumers won’t be able to buy goods at lower prices but also it is necessary to protect domestic market because they important for economic growth of country.

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]]> By: Muhammet Murat SEKBA http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-17942 Muhammet Murat SEKBA Mon, 17 Oct 2011 13:40:33 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-17942 @Ozge_Elif I agree with your first response. Especially the "Cheap goods can be satisfactory for consumers, but it will result in profit loss for local producers." sentence gives the answer of the question. @Ozge_Elif

I agree with your first response. Especially the "Cheap goods can be satisfactory for consumers, but it will result in profit loss for local producers." sentence gives the answer of the question.

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]]> By: Muhammet Murat SEKBA http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-17941 Muhammet Murat SEKBA Mon, 17 Oct 2011 13:38:18 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-17941 A country wouldn’t want cheap goods in its domestic economy in order to protect its own firms. Because with cheap imports, there will be less domestic manufactures of same good and the workers who are working in these firms would lose their jobs. On the other hand the consumer welfare increases with cheap goods as more people are able to pay the price for that product, while these cheapness may harm some domestic firms. Dumping is basically the sale of a country’s goods with a price that is lower than the price that the exporting country sells the goods in their own country. The distinction is important because otherwise, if it was the sale of a country’s goods below the importing country’s cost of production it would mean that its simply free trade and not dumping. No because if a nation does not prevent the domestic market from dumping it will have negative effects on the internal industry of the country. However, if a country’s domestic market is protected, it is protected from all outside effects. A country wouldn’t want cheap goods in its domestic economy in order to protect its own firms. Because with cheap imports, there will be less domestic manufactures of same good and the workers who are working in these firms would lose their jobs. On the other hand the consumer welfare increases with cheap goods as more people are able to pay the price for that product, while these cheapness may harm some domestic firms.

Dumping is basically the sale of a country’s goods with a price that is lower than the price that the exporting country sells the goods in their own country. The distinction is important because otherwise, if it was the sale of a country’s goods below the importing country’s cost of production it would mean that its simply free trade and not dumping.

No because if a nation does not prevent the domestic market from dumping it will have negative effects on the internal industry of the country. However, if a country’s domestic market is protected, it is protected from all outside effects.

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]]> By: Dogan Ozcan http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-17926 Dogan Ozcan Mon, 17 Oct 2011 07:13:10 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-17926 @Ozge_Elif Thanks for your answers. Especially for the 3rd question. I couldn't undrstand the question but after reading your answer I undrstood better. @Ozge_Elif

Thanks for your answers. Especially for the 3rd question. I couldn't undrstand the question but after reading your answer I undrstood better.

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]]> By: Dogan Ozcan http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-17925 Dogan Ozcan Mon, 17 Oct 2011 07:10:45 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-17925 Why would a country want to keep cheap imports out of its domestic markets? Don’t cheap goods make consumers happy? -Of course cheapness is a good thing for consumers. Because they pay less money to buy something. Also this is a good situation for governments, too. Because government pay less money to import those products. Until this point cheapness is a good term for consumers and government. But for domestic firms it is not a good thing. Because of the low prices the firms are going to decrease their prices. After this, a situation occurs:"Dumping". In international trade, this occurs when one country exports a significant amount of goods to another country at prices much lower than in the domestic market. <a href="http://(http://www.investopedia.com/terms/d/dumping.asp#axzz1b10Eyb8U)" rel="nofollow">(http://www.investopedia.com/terms/d/dumping.asp#axzz1b10Eyb8U)</a> Because of this situation unemployment will increase because production will be less. Does dumping refer to the sale of a country’s goods below the importing country’s costs of production or the costs of production in the country where the good is made? Why does this distinction matter? -In international trade, this occurs when one country exports a significant amount of goods to another country at prices much lower than in the domestic market. <a href="http://(http://www.investopedia.com/terms/d/dumping.asp#axzz1b10Eyb8U)" rel="nofollow">(http://www.investopedia.com/terms/d/dumping.asp#axzz1b10Eyb8U)</a> Distinction is important for a country because distinction give to the country the chance of exporting the products with a lower price which is lower than the production cost. When a nation protects its domestic market from dumping, is the principle of comparative advantage being undermined? Discuss. -Comparative advantage occur when a country use lower opportunity costs to produce the goods. Why would a country want to keep cheap imports out of its domestic markets? Don’t cheap goods make consumers happy?

-Of course cheapness is a good thing for consumers. Because they pay less money to buy something. Also this is a good situation for governments, too. Because government pay less money to import those products. Until this point cheapness is a good term for consumers and government. But for domestic firms it is not a good thing. Because of the low prices the firms are going to decrease their prices. After this, a situation occurs:"Dumping". In international trade, this occurs when one country exports a significant amount of goods to another country at prices much lower than in the domestic market. (http://www.investopedia.com/terms/d/dumping.asp#axzz1b10Eyb8U) Because of this situation unemployment will increase because production will be less.

Does dumping refer to the sale of a country’s goods below the importing country’s costs of production or the costs of production in the country where the good is made? Why does this distinction matter?

-In international trade, this occurs when one country exports a significant amount of goods to another country at prices much lower than in the domestic market. (http://www.investopedia.com/terms/d/dumping.asp#axzz1b10Eyb8U) Distinction is important for a country because distinction give to the country the chance of exporting the products with a lower price which is lower than the production cost.

When a nation protects its domestic market from dumping, is the principle of comparative advantage being undermined? Discuss.

-Comparative advantage occur when a country use lower opportunity costs to produce the goods.

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]]> By: Ozge_Elif http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-17775 Ozge_Elif Sat, 15 Oct 2011 14:55:42 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-17775 Hi Suyeon, You said that the protectin of local firms can be violation of consumers' right to have cheaper products.However, I believe that if we think of the long term, protection of local firms means protection of citizens, because the improvement of local firms will make more people employed and it will raise the standard of living. Hi Suyeon,

You said that the protectin of local firms can be violation of consumers' right to have cheaper products.However, I believe that if we think of the long term, protection of local firms means protection of citizens, because the improvement of local firms will make more people employed and it will raise the standard of living.

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]]> By: Ozge_Elif http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-17774 Ozge_Elif Sat, 15 Oct 2011 14:52:54 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-17774 1-) Countries want to keep cheap products out because these products can threathen the domestic goods. Cheap goods can be satisfactory for consumers, but it will result in profit loss for local producers. Thus, the economy of the country can face with some problems because of the trade imbalance. 2-) Dumping means that the goods are sold below the cost of production in the country in which the goods are made. Dumping is important because it can result in affecting a country that the local firms will not be able to compete with other markets. 3-) The principle of comparative advantage is being undermined. However, comparative advantage undermines the purpose of free trade because it can create a huge difference between poor and rich. I think there are two possible results of comparative advantage. First is all countries will depend on each other. Second is that countries will choose to have the resources by wars instead of depending on each other. 1-) Countries want to keep cheap products out because these products can threathen the domestic goods. Cheap goods can be satisfactory for consumers, but it will result in profit loss for local producers. Thus, the economy of the country can face with some problems because of the trade imbalance.

2-) Dumping means that the goods are sold below the cost of production in the country in which the goods are made. Dumping is important because it can result in affecting a country that the local firms will not be able to compete with other markets.

3-) The principle of comparative advantage is being undermined. However, comparative advantage undermines the purpose of free trade because it can create a huge difference between poor and rich. I think there are two possible results of comparative advantage. First is all countries will depend on each other. Second is that countries will choose to have the resources by wars instead of depending on each other.

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]]> By: cle http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-17495 cle Wed, 12 Oct 2011 00:37:44 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-17495 # Quinn Richardson i like your response to question number three, how it gives consumers false impressions about the prices of imported goods, and how dumping can ruin the local economy. # Quinn Richardson

i like your response to question number three, how it gives consumers false impressions about the prices of imported goods, and how dumping can ruin the local economy.

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]]> By: cle http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-17493 cle Wed, 12 Oct 2011 00:25:59 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-17493 1. Why would a country want to keep cheap imports out of its domestic markets? Don’t cheap goods make consumers happy? -yes, however if there is s surplus, and if there are sales at lower than the production price, It can ruin the economy of complementary products and other producers in the countries. 2. Does dumping refer to the sale of a country’s goods below the importing country’s costs of production or the costs of production in the country where the good is made? Why does this distinction matter? -It refers to the sale of the countries goods below the cost of production of the importing countries. This is because the importing country is the one who’s economy will be affected by the dumping. 3. When a nation protects its domestic market from dumping, is the principle of comparative advantage being undermined? Discuss. -Sort of, because the comparative advantage can’t be imported, however if dumping has allowed the local comparative competition to go out of business, then It doesn't matter because then the country can’t sustain itself. 1. Why would a country want to keep cheap imports out of its domestic markets? Don’t cheap goods make consumers happy?

-yes, however if there is s surplus, and if there are sales at lower than the production price, It can ruin the economy of complementary products and other producers in the countries.

2. Does dumping refer to the sale of a country’s goods below the importing country’s costs of production or the costs of production in the country where the good is made? Why does this distinction matter?

-It refers to the sale of the countries goods below the cost of production of the importing countries. This is because the importing country is the one who’s economy will be affected by the dumping.

3. When a nation protects its domestic market from dumping, is the principle of comparative advantage being undermined? Discuss.

-Sort of, because the comparative advantage can’t be imported, however if dumping has allowed the local comparative competition to go out of business, then It doesn't matter because then the country can’t sustain itself.

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]]> By: Suyeon So http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/comment-page-3/#comment-17480 Suyeon So Tue, 11 Oct 2011 21:06:24 +0000 http://welkerswikinomics.com/blog/2008/10/21/fair-trade-vs-free-trade-the-problem-with-dumping/#comment-17480 @Chloe Colberg I agree with your idea that cheap goods are limited to protect the domestic market. You mentioned the consumer’s willingness to buy cheaper imported product, so I just wondered if the protectionism is a violation of consumer’s right to buy cheap and good products. I also agree with your idea about the second question. But for the third question, I think dumping is related with the comparative advantage, because nation with comparative advantage is the one that is capable of providing goods in cheaper price – it can be cheaper than the cost of production of importing nation, which is related with the dumping. I see the points in your argument, but I think it does undermine the theory related with the comparative advantage. @Chloe Colberg

I agree with your idea that cheap goods are limited to protect the domestic market. You mentioned the consumer’s willingness to buy cheaper imported product, so I just wondered if the protectionism is a violation of consumer’s right to buy cheap and good products. I also agree with your idea about the second question. But for the third question, I think dumping is related with the comparative advantage, because nation with comparative advantage is the one that is capable of providing goods in cheaper price – it can be cheaper than the cost of production of importing nation, which is related with the dumping. I see the points in your argument, but I think it does undermine the theory related with the comparative advantage.

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