Reverse Dumping: A Form of Spatial Price Discrimination

Abstract

This paper generalizes Joan Robinson's analysis of dumping under a spatial price theory framework. The dumping of goods is shown to be a natural form of spatial pricing rather than necessarily an act of predatory design. Viewed as such, dumping neither requires predatory motives nor competition in markets where the goods are to be dumped. A simple spatial monopoly model is used to derive the firm's optimal price policy on sales to nearby and to distant customers under different demand and cost conditions. The paper then resolves the question of reverse dumping which may or may not benefit the nearby home country customers.