Suppose that the production technology of a self-proclaimed "infant industry" permits economies of scale. Suppose also that the same technology is available to foreign producers.
Is there a valid argument for protection in this situation from the perspective of the world as a whole? Why or why not?© BrainMass Inc. brainmass.com March 4, 2021, 8:10 pm ad1c9bdddf
The infant industry argument is used to justify the use of tariffs and subsidies for domestic industries. Infant industries are so-called because they are just beginning. Economies of scale usually do not exist for them, because it takes time to develop efficiency. For example, a new phone company wouldn't have economies of scale ...
The solution discusses the "infant industry."