Free Pricing Essay

1103 words - 4 pages

Companies should be free to price product as they want to for international markets.Pricing decisions are a critical element of the marketing mix. The general rule of pricing is that over the long run, prices must exceed costs and may never exceed those of the competitors. The objective is to charge what a product is worth to the customer and cover all costs and provide a margin for profit in the process. International pricing is much more complicated by the fact that an international business must conform to different rule-making bodies and to different competitive situations in each country. Today we will not discuss the general strategies of pricing.What we concern about is should companies be free to price product as they want to for international markets? Going to the international market, companies find out that it is more complicated to price their product. Their pricing systems and policies must also be consistent with other uniquely global constraints. In addition to the diversity of international markets in all three basic dimensions of cost, competition, and demand, international marketers are also confronted by conflicting government tax policies and claims as well as various types of price controls. These include dumping legislation, resale price maintenance legislation, price ceilings and general reviews of price levels. The first important issue is dumping.Dumping Gatt's 1979 antidumping code defined dumping as the sale of an imported product at a price lower than that normally charged in a domestic market or country of origin. In addition, many countries have their own policies and procedures for protecting national companies form dumping. Dumping is a major issue in the Uruguay Round of GATT negotiations. U.S is a country that always complains about the dumping from various countries. Such as many dumping issues involved manufactured goods from Far East.As a matter of fact many countries use dumping legislation as a legitimate device to protect local enterprise from predatory pricing practices by foreign companies. Some countries present protectionism, a device for limiting foreign competition in a market. The rationale for dumping legislation is that dumping is harmful to the orderly development of enterprise within an economy. As far as I can see, I do not think long-term or continuous dumping is a bad thing. It provides a great opportunity for a country to take advantage of a low-cost source of a particular good and to specialize in other areas.Antidumping is the current reality of the protection. Projectionist interests stretch the defining of dumping as far as they may shelter actions against imports under the antidumping umbrella.From the history of antidumping regulation and its evolution under the GATT system we find that it is becoming a major instrument of protection. Antidumping is the fox put in charge of the henhouse -- ordinary protection with a good public relations program. There is little in its history to...

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