Wednesday, December 21, 2011

The Brazilian Market for Replacement Tyres: Combining Environment Issues with Free Trade
© 2011 INSEAD Case Study
Also available: Teaching Note

The ‘Brazilian Market for Replacement Tyres’ is an evaluation case. The study discusses the impact of new environmental legislation adopted by the Brazilian government on the various companies that participate in this market (importers, exporters and retailers). Those that suffered most were importers of used tyres, who had to stop doing so because of the regulatory changes. Since this is an evaluation case, the unit of analysis is the Brazilian government’s decisions over the past two decades involving international trade and recycling of tyres. The impacts of these decisions on the Brazilian market are assessed, along with the effects on the country’s trading partners and the disputes generated with other countries (of the European Union and Mercosur) and the environmental impact.

Pedagogical Objectives: This evaluation case provides a perspective on: 1. How rule changes affect the competitive landscape in the Brazilian market? 2. How should firms react to the positive or negative impacts of the constantly changing scenarios? 3. Should firms should lobby the government to modify its policy decisions? and how they should do it? 4. How to balance environmental rules with trade regulations?