According to Krugman,the ideal way for a country to respond,when the foreign competitors of its companies are already being supported by government subsidies,is probably not to engage in retaliatory action,but to:

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According to Krugman, the ideal way for a country to respond to foreign competitors being supported by government subsidies is to help establish rules that minimize the use of trade-distorting subsidies. This would create a more level playing field for domestic companies and would avoid a cycle of retaliatory actions between countries. Providing subsidies to a new industry or using home-market protection and export-promoting subsidies could also be considered trade-distorting and may not address the root issue of unfair competition. Thus, the best choice is A.

According to Krugman,the Ideal Way for a Country to Respond,when