below the cost of production for a short period of time, and when they have driven out the domestic U.S.

competition, they then raise prices. Economists sometimes call this scenario predatory pricing, which we

discuss in the Monopoly chapter.

Should Anti-Dumping Cases Be Limited?

Anti-dumping cases pose two questions. How much sense do they make in economic theory? How much sense

do they make as practical policy?

In terms of economic theory, the case for anti-dumping laws is weak. In a market governed by demand and

supply, the government does not guarantee that firms will be able to make a profit. After all, low prices are

difficult for producers, but benefit consumers. Moreover, although there are plenty of cases in which foreign

producers have driven out domestic firms, there are zero documented cases in which the foreign producers

then jacked up prices. Instead, foreign producers typically continue competing hard against each other and
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