protection of domestic industry (1 Viewer)

[wolf7]

whata are the arguments for and against protection of domestic industry

 

[klaw]

For:
* Dumping
* Defence
* Employment
* Infant industries

Against:
* Inefficient allocation of resources-> higher prices for consumers
* Less specialisation and competitiveness

 

[wolf7]

any more information against protection of domestic industry

 

[Rafy]

Well against is basically a lack of competition which means that local industries are not forced to be efficent in order to compete (leading to inefficent uses of resources)
Without protection, foreign producers can enter the local market and compete with domestic industry. This increased competition means that local industry must inmprove efficency and productivity (i.e more output for the same input) in order to compete.
Competition also means lower costs for consumers, and an efficent use of resources.
With protection this does not happen very well. (i.e higher prices, low efficency, low competition)

This can also lead to supply constraints.