a) It is sometimes argued that, if a government protects a domestic industry (for example, using tariffs or subsidies) that is facing import competition from a more efficient foreign industry, this would be a net gain for the country as a whole, even if the foreign industry is itself protected. Give arguments for and against this pointof view, drawing on Ricardo’s theory of trade, the Standard Model, and other theory that you consider relevant. Finally, does the size of the country matter?
a) It is sometimes argued that, if a government protects a domestic industry (for example, using tariffs or subsidies) that is facing import competition from a more efficient foreign industry, this would be a net gain for the country as a whole, even if the foreign industry is itself protected. Give arguments for and against this pointof view, drawing on Ricardo’s theory of trade, the Standard Model, and other theory that you consider relevant. Finally, does the size of the country matter?
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter18: Gaining From International Trade
Section: Chapter Questions
Problem 4CQ
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a) It is sometimes argued that, if a government protects a domestic industry (for example, using tariffs or subsidies) that is facing import competition from a more efficient foreign industry, this would be a net gain for the country as a whole, even if the foreign industry is itself protected. Give arguments for and against this pointof view, drawing on Ricardo’s theory of trade, the Standard Model, and other theory that you consider relevant. Finally, does the size of the country matter?
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