The French highly value domestic production of traditional French cheese made by high-cost, traditional production methods. According to the specificity rule, the most efficient policy tool to protect this traditional industry would be:
A)to provide a production subsidy to the domestic firms.
B)to impose an import tariff on cheeses produced in other countries.
C)to impose an import ban on cheeses produced in other countries.
D)to eliminate all barriers on cheese imports since no protectionist policy would be efficient.

Question

Quizplus · Accepted Answer

A production subsidy to domestic firms is the most efficient policy tool according to the specificity rule because it directly supports the high-cost, traditional production methods of domestic cheese producers without distorting international trade as much as tariffs or import bans would.

The French Highly Value Domestic Production of Traditional French Cheese