Explore BrainMass

Explore BrainMass

    Integration

    Economic integration is the unification of economic policies of different nations or states through the elimination of tariff or nontariff barriers of trade. This is done to decrease the price for consumers and distributors in order to increase combined productivity. Economic integration incorporates the economic theory of the second best, which is the theory that free trade is the best option when there is free competition and no trade barriers.

    Integration is used in economics because the rationale is that it will lead to higher productivity. There are multiple stages in economic integration, from some association between countries in a preferential trade area to a complete economic integration, in which the economies of countries are completed integrated¹. When countries in a geographical region block off imports from non-member countries in order to trade exclusively with each other, it is called a regional trading bloc. Regional trading blocs are said to shape the pattern of world trade, a concept know as regionalism.

    The stages of integration are as follows, going from highest level of integration to the lowest²:

    1. Political Union
    2. Fiscal Union
    3. Monetary Union
    4. Common Market
    5. Customs Union
    6. Free Trade Area
    7. Preferential Trade Area
    8. Independent Economy

    Complete economic integration has a single economic market, a common trade policy, a single currency, common monetary policy (EMU) combined with one fiscal policy, tax, and benefit rates². It is the complete union of policies, rates, and trade rules.

    Economic integration contains the functions of trade creation and trade diversion, and the Pareto efficiency of factors. It is an important part of studying the trade relationships between countries.

     

    References:

    1. Johnson, H. An Economic Theory of Protection, Tariff Bargaining and the Formation of Customs Unions. Journal of Political Economy, 1965, vol. 73, pp. 256–283.
    2. Negishi, T. Customs Unions and the Theory of the Second Best. International Economic Review, 1969, vol. 10, pp. 391–398

    © BrainMass Inc. brainmass.com April 20, 2024, 6:44 am ad1c9bdddf

    BrainMass Solutions Available for Instant Download

    Market Failures and Exceptions

    For each of the following situations, the market system has failed and/or just will not allocate resources efficiently: Situation 1: Firm A produces cement sifters. The process includes the melting of metals and chemicals which give the sifters strength. In the production process, waste is produced and released into the river

    Merging Firms

    Imagine one firm buys another firm. What issues might arise as they attempt to merge their respective performance management systems? What might be the risks for the combined firm? How could the firm mitigate these risks? The book I am using is: Besanko, D., Dranove, D., Shanley, M., & Schaefer, S. (2009). Economics of strat

    Expansion and Merger

    The health care industry wants to expand and that its only option is a merger. Now the industry is confronted with government regulations to oversee the merger. 1. Why is government regulation is needed, what major reasons for government involvement in a market economy? 2. What would be the rationale for the intervention

    marketing

    1. Most people think of marketing as only promotion; they only see the tip of the marketing iceberg. However, marketing is much more. Recently AMA redefined what marketing is. Their new definition is as follows: "Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchangin

    Financial Ratio Calculations

    Please show me how to calculate the following financial ratios using Best Buy's income statement and balance sheets. Profit Margin Asset turnover Current Ratio Debt-Equity Ratio PE Multiple ROE (Return on Equity) I am using the company/s most recent annual data, ending March 3, 2012 which can be accessed on pages 1

    Discuss federalism.

    The United States at the end of World War II stood as the world's preeminent superpower, with new-found political and economic wealth. To what degree, if any, has America's ascendancy on the world stage affected notions of federalism? Has the federal government achieved more power in the post-World War II era? Or, have notions o

    Oracle

    In what ways is Oracle seeking to create value from its acquisitions?

    Six steps to decision Making

    Suppose a soft-drink firm is grappling with the decision about whether or not to introduce to the market a new carbonated beverage with 25 percent real fruit juice. How might it use the six decision steps to guide its course of action?

    Industry Organization

    An industry consists of 6 firms, with sales of $500,000, $400,000, $300,000, $150,000, 75,000, and $60,000. Now, suppose the largest and smallest firms merge. a. Calculate the Herfindahl-Hirschman index (HHI) before the merger. Show your work. b. Calculate the Herfindahl-Hirschman index (HHI) after the merger. Show your wo

    Safety stock

    1. Is Safety Stock required in an MRP system? Why? 2. Does using JIT negate the use of an MRP system? Why? 3. Most practitioners currently update MRP weekly or biweekly. Would it be more valuable if updated daily, or even on a real-time basis? Explain why.

    The Cournot Model

    Given the reaction function of duopolist A, QA = (12-QB)/2 (1) and the reaction function of duopolist B, QB = (12-QA)/2 (2), find the Cournot solution, that is to find QA and QB by substituting (1) into (2).

    Business strategy, Managerial economics

    1. Predatory pricing is a strategy A) where a firm enjoys lower costs due to knowledge gained from its past production decisions. B) used by a vertically integrated firm to squeeze margins of its competitors. C) where a firm temporarily prices below its marginal cost to drive competitors out of the market. D) where an incu

    Multi Plant Monopoly

    A monopolist with two plants operates with a marginal revenue of 500-4Q and marginal costs of 4Q for plant 1 and 2Q for plant 2. What are outputs at each plant to maximize profits? What price maximizes profits? What are maximum profits?

    Economics/microsoft anti trust case

    What is your opinion and brief description about the microsoft anti trust case. Need your opinion about the outcomeand if the solution was fair? why or why not? What remedies were not implemented and the impact you think the solution would have on microsofts competitors.

    International Economics

    Please respond to each question individually. Please let me know if there are references as well. 1. Is it possible for comparative advantage to change, and thus change the direction of trade? 2. What are the challenges of the international trading system? Explain, give examples and/or back up your answer with evide

    Vertical Integration and Market Foreclosure

    Please help with the following problems. Explain the phenomenon of market foreclosure. Specifically, explain how a vertical merger may "substantially lessen competition or tend to create a monopoly" by virtue of market foreclosure. Explain how the following mergers might result in market foreclosure: a. A shoe manufacture

    A company that manufactures T-shirts produces and sells its products in a perfectly competitive T-shirts market. The manager forecasts the wholesale price of T-shirts next year to be $7.00.

    1. A company that manufactures T-shirts produces and sells its products in a perfectly competitive T-shirts market. The manager forecasts the wholesale price of T-shirts next year to be $7.00. The firm's estimated marginal cost is SMC=12-0.005Q+0.0000008Q^2 where Q is the number of T-shirts produced and sold each month.

    Strategy to earn higher profits

    Argyle is a large, vertically integrated firm that manufactures sweaters from a rare type of wool produced on its sheep farms. Argyle has adopted a strategy of selling wool to companies that compete against it in the market for sweaters. Explain why this strategy may, in fact, be rational. Also, identify at least two other strat

    Lunch and Learn

    Please help so I can complete the following: Consider the following scenario: You have been asked by the director of your department to put together a "lunch-and-learn" wherein you will give your coworkers an introduction to the concepts of international strategy and organizational design. Address the following topics

    Understanding market strategy and organizational structure

    You realize there's a link between market strategy and organizational structure...so it's time to do more research! Look at three very different global companies. Determine their organizational structure and what market entry strategies each of these companies are currently using. Consider why each company designed its organizat

    Does Free trade Encourage Pollution?

    Does free trade encourage pollution as corporations build factories and plants in countries with more lenient air and water pollution controls? Or does it encourage higher standards, as better controls and higher standards are brought in with the growing corporations? The CEO and COO in the USA hope to use your writing and ex