- 7 -

dumping, short-run or intermittent dumping and long-term or continuous dumping. In the case of sporadic dumping the motivation is to dispose of goods for a short-run to get rid of surplus shock. Short-run or intermittent dumping is not continuous and is motivated by entering into a new market, retaining the market share or driving away the competitors from the market. Long-term or continuous dumping is motivated by the intent to reach or maintain full production in large scale economies. Sporadic dumping is likely to result only in damage to the exporting or the importing country. Short-run dumping also does not necessarily hurt.<sup>23</sup> Viner argued that AD authority may be needed to protect domestic consumers against predatory dumping. In predatory pricing a foreign firm or cartel attempts to drive away the domestic competitors then establishes a monopoly and subsequently increases the price.<sup>2 4</sup> "Predatory Pricing", thus, "refers to the use of short-run price cutting in an effort to exclude rivals on a basis other than efficiency in order to gain or protect market power. . . . Predatory pricing, however, is a complex form of anticompetitive conduct. It requires the perpetrator to incur substantial losses or at least to forego present profits in the hope that those losses can be more than recouped in the future through the exercise of market power. Thus, market conditions play a key role in determining whether price predation is a feasible tactic for a firm to employ. The predator must have a very substantial share of the market or at least the capacity to acquire such a share." 25 However, economists are not in full agreement as to the occurrence of predatory dumping. It is maintained that it is inconceivable for a firm to suffer losses over a long period of time and that as for predatory dumping a firm must establish a global monopoly, that too is difficult to conceive will happen in most industries. Hoekman and Leidy point out that even laboratory experimental work by Isac and Smith has failed to produce any evidence of predatory pricing.<sup>2 6</sup> On the other hand it is maintained by others that instances of predatory pricing are there although they are rare. Thus the OECD Report mentioned above concludes: "Perhaps all that can be said is that cases of predation may arise but at most only very rarely."<sup>2 7</sup> Much in the same vein, Hindley observes that examples of predatory pricing are few, "they are not zero." According to him, recent analysis that suggests predatory pricing will "never" occur is too strong. He goes on to say: "The law and economics 23 Beirwagen, Rainer M. and Kay Hailbronner, "Input, Downstream, Upstream, Secondary, Diversionary and Components or Subassembly Dumping", 22 J.W.T. 27 at 32 note 27, (No. 3 1988). See also, Schoenbaum, Thomas J., "Antidumping and Countervailing Duties and the GATT: An Evaluation and Proposal for a Unified Remedy for Unfair International Trade", 30 German Y.B.I.L. 177 at 179 (1987).

> 24 Viner attributes the enactment of the first antidumping provision in the U.S. in 1916 to the dumping threat posed by the highly cartelized and heavily protected German industries. See Staiger, Robert W. and Frank A. Wolak, The Effect of Domestic Antidumping Law in the Presence of Foreign Monopoly, NBER Working Paper Series, Working Paper 3254 at I (February 1990).

> 25 OECD, Predatory Pricing, at 81 (Paris, 1989).

> **26** See Isaac, R. Mark and Vernon L. Smith, "In Search of Predatory Pricing" 93 J. Pol. Eco. 320 (1985) referred to in Hoekman and Leidy, supra note 22, at 32.

27 OECD, supra note 25, at 81.