👉 Short-term gain, long-term price war.
📘 What is Dumping?
Dumping is the practice of selling products or services below cost, usually aiming to eliminate competition or rapidly gain market share.
- Common in competitive industries such as hospitality or airlines.
- Can generate short-term perception of opportunity, but affects profitability and may destabilise the market.
✅ Why is Dumping important?
It helps understand risks of aggressive pricing strategies:
- Can attract customers initially, but is unsustainable.
- May trigger price wars and damage reputation.
- Can carry legal risk in regulated markets.
💡 Practical example of Dumping
A hotel drops its room price to €50 when the real cost is €80, aiming to attract guests and outcompete a nearby competitor. Short-term bookings may increase, but losses are incurred and the market suffers.
🔄 Disambiguation of Dumping
- Dumping vs Promotion or Discount: Promotions aim to attract clients without selling below cost, whereas dumping sacrifices profitability.
- Dumping vs Healthy Competitiveness: Competing on price is normal; dumping means intentionally unsustainable pricing.
In summary:
Dumping = selling below cost to quickly gain market share, but with the risk of losses and market disruption.
