Strategic trade policy has two main components that explain why certain policies should be undertaken to affect the outcome of interactions between different firms. The first component argues that government intervention in business matters can positively affect the country by raising national income.
Thus, governments should seek to subsidize promising enterprises that can meaningfully affect the economy. The second component suggests that government interventions can help new emerging organizations enter the market. In particular, national government subsidies and policies can help remove the barriers to entry created by foreign businesses, ensuring domestic firms have a share of the global market.
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