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Downstream Dumping – Definition

Downstream dumping Definition

Dumping occurs when a company sells their products in a foreign land at a lower price than its fair value. It is a method used by the businesses to capture the market in the foreign land and is considered to be illegal if that negatively affects the producers in the importing country.

A Little More on What is Downstream Dumping

In downstream dumping, the manufacturer sells an almost finished product at a low price to another producer in the domestic country. Then the second producer processes the product minimally and exports the product to a foreign country at a price lower than the fair value.

For example, Company X and Company Y are situated in the same country and Company X produces wooden furniture. Company X sells their furniture at a low price to Company Y. Company Y then processes it further by painting and varnishing and exports it to another country at a cost lower than the fair value. This is called the downstream dumping.
This has the same effect as the dumping on the importing country’s market and its producers. It becomes difficult for them to compete this imported product sold at a lower price. They often find it difficult to sell their own products in their domestic market and have to bear huge losses.

References for Downstream Dumping

Academic Research on Downstream dumping

Garbage, recycling, and illicit burning or dumping, Fullerton, D., & Kinnaman, T. C. (1995). Journal of environmental economics and management29(1), 78-91. This research takes a look at alternative incentives for garbage disposal. With dumping and recycling as the only options, the authors propose a deposit-refund system that consists of a tax on all garbage output. The analysis and implications of this proposal are discussed.

Fishing downstream: The political economy of effective administered protection, Feinberg, R. M., & Kaplan, S. (1993). Canadian Journal of Economics, 150-158. This research empirically examines the natural results of consumption industries that are located downstream of industries that are harmed by import barriers. The authors discuss the effects of upstream protection on supply and demand. Recent trends in U.S. anti-dumping and duty cases are also examined.

Input, downstream, upstream, secondary, diversionary and components or subassembly dumping, Bierwagen, R. M., & Hailbronner, K. (1988). J. World Trade22, 27.

Evidence on the upstream and downstream impacts of antidumping cases, Krupp, C. M., & Skeath, S. (2002). The North American Journal of Economics and Finance13(2), 163-178. By analyzing a pair of upstream/downstream product pairs from 1977 to 1992, the authors take a look at the effects of anti-dumping claims. The findings show that the imposition of anti-dumping has both positive and negative effects for different parts of the industry.

The Effects of Anti-dumping Measures on Relating Industries——Input/Output Analysis of Price Effects of Anti-dumping Duties [J], Zhongdi, Z., & Xiaohua, B. (2004). Economic Research Journal1, 008. This paper empirically measures the price effects of antidumping duties on segments of the Chinese chemical industry. The findings of the research show that anti-dumping measures negatively affect downstream industries. The authors offer policy recommendations for future anti-dumping proceedings.

The Trade and Tariff Act of 1984: An Analytical Overview, Price, J. H. (1985). In Int’l L. (Vol. 19, p. 321). This 1985 article provides an analysis of the Trade and Tariff Act of 1984. Besides providing an in-depth examination of the policies, the author also offers a look at the criticisms related to this controversial act.

Effect of dumping and cleaning activities on the aquatic ecosystems of the Guadiamar River following a toxic flood, Prat, N., Toja, J., Sola, C., Burgos, M. D., Plans, M., & Rieradevall, M. (1999). Science of the total environment242(1-3), 231-248. This study documents the recover the aquatic ecosystem in the Guadiamar River Basin in southwest Spain in the late 1990s. The author provides scientific and zoological results of the slow recovery of this ecosystem.

Fuel film behavior analysis using simulated intake port, Iida, M., Yoshikawa, K., Tanaka, H., Wang, G., & Arcoumanis, C. (2010). SAE International Journal of Engines2(2). This study used a simulated motorcycle intake port in real engine conditions to analyze various aspects of the transient behavior of the engine. Laser-induced Fluorescence (LIF) was employed to analyze fuel film thickness, an important factor in low emissions and proper fuel consumption. These tests were performed under various conditions, and the results are related here.

The Issue of Public Interest in Anti-dumping Proceedings [J], Qing-hua, Z. H. U. (2003). Journal of Central University of Finance & Economics1, 015. This article examines Chinese Anti-dumping Proceedings through the lens of public interest. Anti-dumping moves taken by the Chinese government are compared with those of the EU and Canada. China’s current regulations have no public interest provisions, and the author’s offer policy positions to bring Chinese anti-dumping proceedings on par with other industrialized countries.

Upstream pollution, downstream waste disposal, and the design of comprehensive environmental policies, Palmer, K., & Walls, M. (2000).  (No. dp-97-51-rev). In this paper the authors develop a model of production and consumption that incorporates three externalities: an upstream manufacturing byproduct, environmental pollution, and downstream solid waste disposal. Through this model, they develop governmental policies to address these issues. Multiple scenarios are run through this model to assess the feasibility and effectiveness of taxation and regulatory approaches, and a mix of the two, in addressing the problem.

Investigation of soil quality and heavy metal concentrations from a waste dumping site of Konabari industrial area at Gazipur in Bangladesh, Islam, M. S., Tusher, T. R., Mustawa, M., & Mamun, S. (2012). Journal of Environmental Science, Toxicology and Food Technology2(1), 1-7. The study was examines the soil pollution from a downstream waste-dumping site in in Konabari industrial area of Bangladesh, during the period from 2010 to 2011. Relation to changes in soil quality as well as chemical characteristics and heavy metals concentrations are analyzed. Technical results are offered, and policy and waste management efforts are described and recommended.

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