a loss? This question has two possible answers, one innocent and one more sinister.

The innocent explanation is that demand and supply set market prices, not the cost of production. Perhaps

demand for a product shifts back to the left or supply shifts out to the right, which drives the market price to

low levels—even below the cost of production. When a local store has a going-out-of-business sale, for example,

it may sell goods at below the cost of production. If international companies find that there is excess supply of

steel or computer chips or machine tools that is driving the market price down below their cost of

production—this may be the market in action.

The sinister explanation is that dumping is part of a long-term strategy. Foreign firms sell goods at prices

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