Arguments For/against Protection

Question 1

Second best world

Answer 1

Distortions exist - ongoing gaps between private social benefits and costs. They result from market distortions (externalities), gov policies distorting otherwise efficient private markets.

Question 2

Specificity rule

Answer 2

If a distortion is present most efficient way to eliminate discrepancy between social and private benefits is to use a policy tool directed at the source of distortion.

Question 3

Infant industry

Answer 3

Temporary tariff is justified as it protects an infant industry from
Imports while it learns to lower costs and become competitive.

Question 4

Dying industry

Answer 4

Displaced alders and other Unutilised resources lead to a loss of income in excess of lost PS.

Question 5

Fiscal

Argument

Answer 5

In poor developing countries import tariff is crucial source of government revenue.