Question

How would the number of firms competing in a particular market affect the likelihood that an exporter to that market would be accused of​ dumping? (Assume that the likelihood of a dumping accusation is related to the​ firm's price difference between its domestic price and its export​ price: the higher the price​ difference, the more likely the dumping​ accusation.)

Answer 1

Answer:

We can assume companies form country A export to country B. Country B's economy is very large and many domestic and foreign firms compete in it. High levels of competition will eventually lower the costs of products sold in a market, so the products sold in Country B have relatively low prices.

In order for foreign companies to compete in country B's market they must have low prices. So companies from country A will sell its products in country B at low prices, increasing the possibility that the price of their exports are lower than their domestic prices (prices for their own country). Therefore the chance for a dumping accusation increases.