Economics of Maritime Business
Chapter 1 International trade explained
Demand is the desire of a consumer to pay a specific price for having a product or service. Supply is, therefore, the response to the desire through the provision, at the price agreed, of the product or service. Without need, a maritime transport service will not be provided. So we will, first of all, discuss maritime transport demand, before trying to find answers to the fundamental questions on supply such as what, how and to whom the shipping services shall be provided. But the demand for maritime transport is a derived demand from trade. Shipping exists because of trade or, in other words, trade is the raison d’être for shipping. That is the reason why the first chapter is devoted to international trade. In this chapter, we will begin with an explanation of what a derived demand is. We will then look at the main characters of trade, the trade theories and their critiques. This will be followed by discussion of the changes in the environment for trade. We will also have a brief review of new economic theories and explanations of trade. We will finally analyse the differences between the trade of primary commodities and that of manufactured products.