Surname 1

Name

Instructor

Module

Date

Case Study 1

There is no doubt that the North American Free Trade Agreement (NAFTA) has produced some

notable net benefits to the Mexican, Canadian, and United States economies. For instance,

clothing prices in the United States have fallen considerably due to these developments. This is

due to the shifting of textile production from the high cost producers in the United States to the

low-cost producers in Mexico (Oh and Suh 120). People in the United States can enjoy the

benefit the affordability of attire while also having money that they can spend on other needs.

The moving of textile production to Mexico has boosted the United States economy.

Exports from the US yearn makers to plants in Mexico have been on the rise. It is clearly stated

that before the enactment of NAFTA, yarn producers in the United States supplied small amounts

of their products to Mexico. The United States supplies more than 70% of the raw materials that

end up in Mexican sewing shops. Between the year 1994 and 2004, cotton and yarn exports from

United States to Mexico grew considerably from $293 billion to $1.21 billion (Oh and Suh 122).

In summary, the United States has benefited in terms of lower clothing prices and increased

exports of yarn and fabric products.

Trade in Canada and Mexico has largely been boosted as a result of the passing of

NAFTA agreement. These are two of the most immediate neighbors of the United States. When

clothing prices are lower in the US, the same case applies to Canada. Most of the exports of

cheaper products from Mexico also find their way into Canada. The availability of cheap labor in
 Surname 2

Mexico is also quite notable within this context. Companies in the United States and Canada

have moved to set up base in different parts of Mexico to cut costs and improve efficiency (Oh

and Suh 124). Mexicans are also hard workers. Basically, NAFTA brings about mutual benefits

among the United States, Canada and Mexico.

Car Price Differentiation Case Study

Question 1

The dissimilarity in product's values seen among the 27 member’s states of the EU has numerous

amounts of causes. Some of the reasons, in my opinion, are the tax, exchange rate inconsistency,

transportation costs, local expenses, and the elasticity of demand, border effect, purchasing

power, manufacturer price strategies, and technical requirements (Mertens and Ginsburgh 156).

However, EU members have different tax policies in most commodities as automobiles. The gap

is an essential distinction between the buying prices of motor among EU members. Nonetheless,

nations with high taxes have lower pre-tax values with an aim to institute logical buying price.

Furthermore, the EU citizens mostly care about the reputation of the brand than the

value, when buying an automobile whereas when purchasing an international car their first

problem is the price. Transporting a good in the state takes a shorter time than among two

countries because the distance between the two municipalities is broader. The national welfare

and GDP of the EU member states are dissimilar. The value of an automobile would be lowered

in a nation where citizens have lesser wages (Mertens and Ginsburgh 160). The policies

considered by the organization are somehow dissimilar, and it can also show the way to a price

differential. Lastly, regulations may issue an improvement in sales to the automobile's prices.

Subsequently, the alteration in the exchange rate between the EU members which use

Euro is a significant element in opposition to fixing the values in all 27 nations. Moreover,
 Surname 3

shipping cost in the event of delivering an automobile from an EU member to another,

augmenting the value slowly in remote destinations. On the other hand, monetary payment and

employee wages differ between diverse Members of the EU, which affect the fixed cost in the

car business in the nation of origin and consequently, the overall value.

Question 2

It is hard to settle on the fact that a pure single market is a possible dream. Proposing that it is, it

remains a tough assignment to decide whether or not such vital differentials can be decreased or

changed (Kirman and Schueller 81). However, Fuel-efficiency and emissions standard in

European automobiles, people can see that there are specific manners in which the Sacco’s will

pursue to influence price equalization, as current legislation rising from EU sanctioned

policymaking bodies has centered its attention heightened regulatory oversight for security.

Nonetheless, the status quo recommend that the bridge distinguishing some of the most

urbanized, and consequently the least developed of countries and the most qualified

manufacturer maybe is too broad to be eliminated. Various attribute dissimilarities have instituted

a condition, for example, where one automobile replica would cost a British citizen nearly 63%

than it would have required a new member of the Union that is Greece.

Question 3

Primarily, United Kingdom is not part of EMU and has not acknowledged Euro as its national

currency so different from the EMU members, the issue of exchange rate fluctuation is visible.

For example, acknowledgment and realization of Great Britain Pound in opposition to Euro

made the values in the UK comparatively more significant than the costs in other EU member

states (Flam and Nordström 113). Additionally, companies with RHD as an alternative to their

manufactured automobiles come at an extra expense and consequently have an additional value.
 Surname 4

Nevertheless, the Government of UK acquires nearly half of the income tax which is partially

extreme among the EU member states. The GDP affects the buying power which is also beyond

the European average impacting to comparatively final costs for commodities in the UK.

Question 4

This fresh and innovative rule issues some necessary transformation in the car industry among

nations of the European Union. For example, unlike the previous time, distributors and dealers

are now permitted to trade multi-brand automobile in any place of their choice. However, the

customers have the free will to buy a broader variety of car brands and also have their repairs and

service done at any workshop of their choice. Consequently, the cost for car prices will

significantly reduce in the European market. However, in some cases such as the costs in

transport as well as the cost of living and business transactions may set varying prices for various

markets (Knetter 478).

Question 5

As stated in the last quality, with new regulations in place customers now have the free will to

choose from an array of brand regardless of their locations. Both these ramifications show the

way to higher competition and market integration in the European Union automobile industry

(Knetter 479). The needs an opportunity to select from an array of brands with the different land

of origins for the Europe Union customers shows the way to a greater need for the general

automobile industry in the European Union which dealers can gain from 20. As a conclusion, the

dealers, suppliers, distributors, and end-user can enjoy more scale welfare in the current and

innovative rule as compared to the last one.

Question 6
 Surname 5

The rivalry between automobile production organizations all around the European Union will

enter a new era after September 2005 when the fresh and innovative guidelines take full effect.

An organization who can issue cheaper and affordable automobiles will triumph over the others

at some point in the new era (Verboven 242). Currently, customers have a number of the cars

producing organization from all around the European Union to pick from and therefore will

select the organization which is providing a vehicle of a better standard with a comparatively low

price.

In this day and age, dealers can vend any brand, anywhere; marketing is instrumental

and integral in an organization's upper hand. In other words, an organization should now oversee

the necessity of diverse European Union nations for different tastes of cars with an aim to

provide them the needed automobile and therefore become advantageous from the intake surplus.

For instance, countries with a comparatively high age average usually have a more significant

need for small vehicles as compared to the nations with low age average (Verboven 260). It is

important to state that fixed cost play an integral part in the final price of the product, and

therefore, should be decreased as much as possible in a competitive market.

 Surname 6

Works Cited

Flam, Harry, and Hakan Nordström. Why Do Pre-Tax Car Prices Differ so Much Across

European Countries? 2nd ed., Centre for Economic Policy Research, 2005.

Gross, Dominique M, and Nicolas Schmitt. Pricing-to-market and Rivalry in the Automobile

Market. 2nd ed., Simon Fraser U, Department of Economics, 2003.

Kirman, Alan, and Nathalie Schueller. "Price Leadership and Discrimination in the European Car

Market." The Journal of Industrial Economics, vol. 39, no. 1, 1990, pp. 69-90.

Knetter, Michael. "International Comparisons of Pricing-to-Market Behavior." American

Economic Review, vol. 2, no. 83, 1992, pp. 473-486.

Mertens, Yves, and Victor Ginsburgh. "Product Differentiation and Price Discrimination in the

European Community: The Case of Automobiles." The Journal of Industrial Economics,

vol. 34, no. 2, 1985, pp. 151-166.

Oh, Hyunjoo, and Moon W. Suh. "What is Happening to the US Textile Industry? Reflections on

NAFTA and US Corporate Strategies." Journal of Fashion Marketing and Management:

An International Journal 7.2 (2003): 119-137.

Verboven, Frank. "International Price Discrimination in the European Car Market." The RAND

Journal of Economics, vol. 27, no. 2, 1996, pp. 240-268.