Question

Strategic trade policy has two components to raise national income helping firms to capture first-mover advantages and intervening in an industry where foreign firms have already gained a first-mover advantage.a) trueb) false

Answer 1

The correct answer is: A) True.

Step-by-step explanation:

Strategic commercial policy is defined as that commercial policy that a government implements through intervention and regulation and that is intended to modify the strategic interaction that occurs in certain sectors between national and foreign companies in the international arena. These actions, which are usually implemented through industrial policy, try

favor national companies over their foreign rivals. Those who support these practices argue that, given the imperfections of the markets, there are good reasons that justify an active industrial policy.

The strategic trade policy argument consists of two explanations: first, it states that with appropriate actions; A government increases national income if it somehow ensures that the companies that appropriate the advantages of acting first are national and not foreign.

Secondly; it is convenient for a government to intervene in an industry if it helps national companies to overcome the entry barriers created by foreign companies; who have already reaped the advantages of the one who acts first.

In conclusion, if these arguments are correct, the government has many reasons to intervene in international trade.