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Dumping
If goods are sold on a foreign market below their cost of production this is referred to as dumping. This may be undertaken either by a foreign monopolist, using high profits at home to subsidize exports for political or strategic reasons. Countries in which such products are "dumped" feel justified in protecting themselves. This is because dumping could result in the elimination of the home industry, and the country then becomes dependent on foreign goods which are not as cheap as they had appeared.
Assume that input prices are constant at r = 1, w = 1, with technology which consists of 5 processes having the following properties: Process Inputs Capital (machine hours)
PROPORTIONAL TAX Is where whatever the size of income, the same rate or same percentage is charged. Examples are commodity taxes like customs, excise duties and sales tax.
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