The Effects of International Trade

The Effects of International Trade
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Introduction
International trade can have significant effects on domestic markets. Countries take part in trade globally to take advantage of specialization. For instance, one country may produce a particular good at a lower cost than other countries that also have some goods that they can produce at low costs. International trade benefits consumers since they save money by acquiring access to foreign goods for lower prices than domestic products. International trade opens up new markets for foreign producers, encouraging them to produce more hence increasing supply. The main aim of this essay is to focus on how opening up to international trade affects demand and supply for goods, the competitiveness of that good’s market, and how the change in competitiveness affects equilibrium price and quantity for both imports and exports.
Imports
Supply or demand
Supply and demand keep market economies on toes. They influence the number of goods produced and the prices sold in the market. International trade in the global economy influences the variety of goods made available to customers by small businesses. Opening up to international trade influences the supply and demand of goods for imports (Sen, 2010). First, with the opening up of new markets, foreign producers get access to a broader market base and produce more. As a result, the supply of goods increases hence a price reduction. Therefore, many countries and consumers develop increased demand for foreign goods. As a result, countries import more. However, this works contrary to local markets since the demand for local goods decreases.
Competitiveness 
As a result of opening up to international trade, there is more access to markets for goods and services that may otherwise not have been available domestically. The number of goods imported increases rapidly. Similarly, goods also available domestically can be obtained by other international providers at a lower price and higher quality. Therefore, opening up to international trade brings the issue of competitiveness for the goods market based on price and quality. Opening up to international trade allows countries to produce goods more efficiently, more quickly, and at a lower cost (Edmond et al., 2015). Opening up trade affects the market of domestic monopoly as consumers can now access more similar products at a favorable price in other international markets. As a result of a widened market, market competition increases for consumers as many alternatives for goods are available. As a result, price competition arises as many producers try to lure consumers to their products and services by reducing the prices of their commodities to a favorable price. Similarly, some opt to improve the quality of their products as one way of luring consumers. Generally, with the opening up to international trade, goods and services are made more readily available, increasing competitiveness in the goods market.
Competition ensures that sellers price items even when the buyer's willingness to pay is unknown. W...