ECON 1116 Lecture Notes - Lecture 15: Infant Industry Argument, Market Power
24 Mar 2016
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Document Summary
The science of economics clearly show that trade benefits all economies. Because countries have different absolute and comparative advantages in producing products and services, free trade is the only way that the world could take advantage of these efficiencies. The argument is often made that an industry should be protected for national security, an argument that is often used by the industry itself because it doesn"t want to compete with foreigners. In some cases, this is a legitimate argument. Even military hardware is composed of parts that are made in other countries. The argument is often presented that infant industries should be protected until they can sustain themselves. However, the whole point of competition is to allow only the most successful companies to thrive. The government would have several problems in enacting trade restrictions based on the infant industry argument.
