Skip to main content
- Lower prices for consumers – prices are as low as possible for consumers if no trade barriers are imposed.
- Greater choice for consumers – free trade means consumers have a greater variety of products to choose from.
- Producers are able to benefit from economies of scale – the market size for producers increases due to foreign buyers. That means producers can take advantage of economies of scale by increasing the scale of their production.
- Greater ability to acquire required production resources – free trade (no trade barriers) allows producers who require for example, raw materials, to acquire them easier and at a lower cost. That lowers production costs, increases efficiency.
- More efficient allocation of resources – free trade (no government intervention) should in theory lead to best possible allocation of resources. That should happen because countries would specialise in producing goods they have a comparative advantage at.
- Benefits of increased competition – free trade means higher competition. That drives improvements in price and quality of products, incentivises producers to innovate and look for more efficient ways of production.
- Source of foreign exchange – since trade is one of the sources of foreign exchange, free trade should increase the amounts of foreign exchange received.
