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Comment by brownbat | Hacker News Reader

Well, there's one hiccup.

You can't privately dump. Well, you can try.

Since you're selling at a loss on the open market, others with capital will see an unexpected price and wonder if you have developed a unique efficiency. After some basic research, some will guess at what you're trying to do.

They then have some great options. Invest in competitors or substitutes for the coming reduced supply. Or, stockpile the goods you sell, buying cheaply from you and even undercutting you in the future. Or, develop ways to reduce fixed costs. Build "fast spin up" sites with on-call labor so you can quickly return to market.

The dumping strategy works pretty well in a game with only two players. It does not work against the entire global system of capital and investment.

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> Invest in competitors or substitutes for the coming reduced supply

Which will be at a loss, so you need just as much money. This is especially hard in developing countries. The market will still be destroyed, and you'll end up with a oligopoly.

> Or, stockpile the goods you sell,

Many things can't be stockpiled, and stockpiling also costs money (see the above)

One example where private dumping is tried, is uber with the taxi business. Uber regularly subsidizes fares (e.g. [1]). Local independent taxi drivers don't have the economic backing of investors and can't fight against dumping.

[1]: http://economictimes.indiatimes.com/news/international/busin...

The taxi business is easy to get into (absent government regulations trying to prevent that). It's hard to see how dumping could prevent competition from rebounding quickly after the dumper's investors get tired of the losses.

You're just arguing that dumping can be fought with dumping and hence it's not rational for economic agents to engage in dumping. When did a rational argument stop the market from doing something?

The thing about free markets is reality tends to punish irrational business practices.

I can now reply to your comment here, so I will reply again :)

You say that reality tends to punish irrational practices which means that some escape this punishment. Hence I will conclude that with time irrational business practices accumulate in the free market.

I can't reply to your last comment below so I'll reply here.

To me it seems that you are using some game theory ideas to explain how markets behave. The problem is that you forget to incorporate concepts from the "reality" you speak of in the last reply - more precisely timespace.

If you incorporate timespace, the enounciation becomes "the probability of the market punishing dumpers increases with time and becomes certainty after an infinit milenia have passed"

> Many things can't be stockpiled

Right, and there are other responses in those situations, as described above.

But even if you retreat to the position that dumping is really only feasible for goods that can't be stockpiled, then you already agree with me in enough cases for this to be moot.

Almost all public concern about dumping is directed at things like tires or concrete or steel that could be easily stockpiled if it were really a dumping strategy, if prices were returning to monopolistic high levels after reduced competition.

What's usually happening is that the other region simply has lower costs of production or is selling off overproduction at their own loss.

Right, the Free Market Fairy that always produces results consistent with rules that can be written on one A4 page /s

> the Free Market Fairy

That's a straw man. Markets have lots of failure modes, this just isn't one of them.

It's like an underpants gnome plan. Maybe it looks OK on paper, but it falls apart under any outside strategic pressure.

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