IntroductionWhen analyzing free trade in relation to other systems that promote commerce in different ways, one must take into account a 360-degree view of all the favorable and derogatory factors of each style. There is no such thing as perfect competition or constant returns; these are two factors that can never truly be in place due to the nature of an economy. The fact is that “economists do not have reliable models” (Krugman, 1987, p. 139) to truly reflect economic behavior. But for the sake of theory, such hypotheses must be formulated to prove points and provide new insights into age-old questions. For this analysis, we will compare free trade to strategic trade policy and an external economic system. All three have their place, depending on how one wishes to shape an economy and what complements an economy most effectively. Strategic Trade Policy First, let's analyze the strategic trade policy system that allows government factions to subsidize and intervene with businesses within a country. their specific sector to promote the profit of said companies and internalize the economy. This type of government intervention manipulates trade policy to benefit the country in question through its domestic producers. “When there is a large domestic market for a good, protecting that market increases the profits of the domestic firm” (Krugman, 1987, p. 136) and is the main reason why a strategic trade policy is implemented. place. The basic idea of ​​this type of policy is to increase wealth or create profit, which is the same reason for pursuing any type of activity, including commerce. This is exactly the sentiment behind what this theory advocates; create success through the promotion of the internal economy. ...... middle of paper ...... true spirit of innovation. With this type of trade, “each country continues to specialize in producing its comparative advantage until the price of its products equalizes with that of other [countries]” (Carbaugh, 2011, p. 73) all over the world. Although strategic trade policy is not perfect, this theory best fits our current society and should be implemented worldwide to create a climate of healthy competition and improve global comparative advantage. Works Cited Carbaugh, R.J. (2011). International Economics (13th ed.). Mason, OH: South-Western Cengage Learning Wright State University (2011). Welcome to Wright State University | Wright State University. Retrieved March 18, 2012, from http://www.wright.edu/~tdung/Chapter6_Pugel.htmKrugman, P.R. (1987). Is this a free trade pass? The Journal of Economic Outlook, 1(2), 131-144.