Briefly explain the case for strategic trade policy in imper

Briefly explain the case for strategic trade policy in imperfectly competitive markets, as well as its limits in practice

Solution

Imperfectly competitive markets is where there are no homogenous products to be sold , cost advantage and role of comparative advantage in production and resource availaibility. When there is high return in trade economies face imperfect competitive markets. Strategic trade policies give opportunities for gain , rise in scale of production reduces cost having a lower AC. Thus, strategic policies defeats competition , tariffs , taxes cause trade wars.