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Strategic Trade Policy Theory

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  • The market and strategic trade.

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    Strategic trade policy argues for government intervention to help companies take advantage of economies of scale and be first movers in their industries but this may cause inefficiency higher costs and trade wars the most common cultural motive for trade intervention is protection of national identity.

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Strategic trade theory describes the policy certain countries adopt in order to affect the outcome of strategic interactions between firms in an international oligopoly an industry dominated by a small number of firms.

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