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The Benefits of Trade
Member rating: No Rating | Words: | Submitted: Wed Aug 27 2003
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The Benefits of Trade There are a number of benefits the citizens and firms of a country may enjoy as a result of being able to trade freely with the citizens and firms of another country. * The benefits of specialisation * The benefits of competition * The benefit of choice By specialising in the production of goods and services the firms of a country will produce with a higher level of productive efficiency. The surpluses produced can then be traded with the surpluses of other countries. By specialising in the production of goods and services where there is an absolute or comparative advantage there is an overall gain in welfare. Increased global competition will encourage allocative and productive efficiency. The concepts of consumer and producer surplus can be used to assess the benefits of free trade. The different between the amount that consumers would be prepared to pay for a good or...
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