The United States providing subsidies for corn upsets their competitors such as Mexico because it would subject them into unfair competition. The Mexicans traders would face fluctuation in prices of corns due to the subsidies in America. It implies that the American government would disadvantages farmers or traders in Mexico in the sense that that they would not be trading on the same grounds as to the America based traders (Holland, 2009 p 210).
In other terms, it means that subsidies in America would lead to unfair competition such as the terms and condition of the trade. The government grant to the corn trades would interfere with regional prices of corn since they would be able to make more supplies to the consumer than Mexico based trader. Therefore, subsidies protect the traders from falling out of the business by offering the financial support and protection from the competitors.
Sunk Costs
Aloysius is exhibiting a form of irrational behavior because he has good alternatives to choose from. He is shocked by the negative economic profits he has incurred in the agriculture sector due to the withdrawal of the subsidies. As a business person Aloysius id demoralized by the facts facing him that he need to choose from either working in fire factory or stay in the agricultural business by starting to plant and sell wheat the sunk of cost by the subsides has affected his decision making process. He is afraid or lack consistent capacity to decide whether to enter into a new field of operation. Aloysius lacks the accord to opt for the fire factory because he is used in the agriculture sector and has full knowledge of agriculture.
Works Cited
Holland, D., R. Barrell, T. Fic, I. Hurst, I. Liadze, A. Orazgani, and V. Pillonca. "The world economy: Fiscal Expansions In North America." National Institute Economic Review 207.1 (2009): 18-22. Print.
Jackson, Donald, and Mary Volcansek. "Human Rights Or Trade Protection? US Politics And The World Trade Organization." Australian Journal of Political Science 44.1 (2009): 155-172. Print.
Mumme, S. P.. "Trade Integration, Neoliberal Reform, And Environmental Protection In Mexico: Lessons For The Americas." Latin American Perspectives 34.3 (2007): 91-107. Print.
