<\/span><\/h2>\n\n\n\nThe monopolist may resort to dumping due to any one of the following motives:<\/p>\n\n\n\n
(1) To get rid of surplus production-<\/em><\/strong> It is possible that, due to some error in demand estimates, the producer monopolist might produce more output than is necessary for the domestic market. This will result in overproduction. If the monopoly tries to sell the extra output in the domestic market, then he will have to lower the price not only for the extra output but for his entire produce. He may find it more profitable to dispose of the extra or surplus output in a foreign market at a lower price than to sell it at home at a higher price.<\/p>\n\n\n\n(2) To crush rivals in foreign markets-<\/em><\/strong> Another motive of dumping may be the monopolist’s desire to crush his rivals out of existence in foreign markets. To achieve this objective, he may sell his product in the foreign markets at a price, which is lower than even his marginal cost of production. Once the foreign rivals are crushed, and the field is clear, he can raise the price again to earn maximum profits even in the foreign markets. <\/p>\n\n\n\n(3) To reap the advantages of increasing returns-<\/em><\/strong> Still another motive of dumping, maybe the monopolist’s desire to reap the advantages and benefits of the law of increasing returns. According to the law of increasing returns, as the monopolist increases his output, the average and marginal costs both decline. But the demand in the domestic market being inelastic, the monopolist will have to reduce the price to an extent greater than the reduction in average cost, if he is to sell the extra output in that market. In addition to that, the monopolist will have to lower the price on all the units to be sold, and not on marginal units, only. Total revenue, and hence his profits, will decline. He will, therefore, find it more profitable to sell the extra or additional output in foreign markets.<\/p>\n\n\n\n(4) To create demand in foreign markets-<\/em><\/strong> The monopolist may sell in foreign markets at a lower price than in the home market because he desires to create new demand for his product in those markets. Once the demand for his product is created and his product becomes popular in foreign lands, he may raise the price at a later occasion.<\/p>\n\n\n\n(5) To take advantage of differences in demand elasticity-<\/em><\/strong> The monopolist may resort to dumping because the elasticity of demand in foreign markets is higher than at home. He may also resort to it because there are several rivals in foreign markets while there is none at home. It is also possible that foreign consumers are in a position to take to substitutes of his product, whereas domestic consumers are not in that fortunate position. So he can charge a higher price at home than abroad.<\/p>\n\n\n\n