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Impact of Government Policies on Trade Governments of many countries enact policies that can have a major impact on international trade flows.

a. Explain how governments might give their local firms a competitive advantage in the international trade arena.

b. Why might different tax laws on corporate income across countries allow firms from some countries to have an competitive advantage in the international trade arena? c. If a country imposes lower corporate income tax rates, does that provide an unfair advantage?

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