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Essay / Research Paper Abstract
This 4 page paper defines and explains what is meant by strategy trade policy, looking at when and how it is used and the potential results. The theory is then practiced by discussing the case of Boeing and Airbus. The bibliography cites 7 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEstrtradepol.rtf
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Unformatted sample text from the term paper:
in sales. Economists have examine the way that some companies may leverage this position with the direct or indirect aid of government support in terms of strategic trade policy.
Theoretically, in a free trade environment, all firms should compete equally, with the commercial supply and demand impacting on the sales and profit levels of a company (Krugman and
Smith, 1994). Companies should then seek to maximise any advantages, such as differentiation, first mover advantages or cost advantage (Thompson, 1998). However, advantages may also be created in the trading
environment by policies. For example the use of trade tariffs, as seen with the protectionism that the US is granting its steel industry, or subsidies, as seen with the help
given to Airbus by the European government to help one company compete with the dominant Boeing. These are both uses of strategic trade policy
One definition of strategic trade policy is " trade policy that conditions or alters a strategic relationship between firms" (Brander, 1995). However, this is a very broad definition, a
broader definition is that it is a government policy that has the aim of shifting profits towards the firms in the home country, usually in oligopoly markets, such as Boeing
and Airbus with the supply of passenger aircrafts. The usual types of help may include grants and/or subsidies, low interest rate loans and the promise of large contracts. However,
help that is given may also stimulate innovation, funding research and development, which in turn may help companies in the home country. The way that strategic trade policy operates
can be seen in an oligopoly, where there are few suppliers and profits are made. All companies would like to increase their profits by gaining market share from a competitor.
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