Persistent Dumping
(Figure 11.1)

Figure 11.1 shows a case of profitable price discrimination under the simplifying assumption that the firm faces a constant marginal cost (and average cost) of production. The marginal production cost is the same regardless of whether the product is sold in the home market or exported, because essentially the same product is sold in both markets. This figure is based on a real case that surfaced in 1989. The U.S. government determined that firms in Japan, Korea, and Taiwan were all guilty of dumping telephones in the U.S. market, causing injury to the plaintiff AT&T and other U.S. firms. The case illustrated here has a single Japanese firm.
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