For infant-industry tariff protection to be valid requires that
A)the tariff be allowed to last forever.
B)only industries that currently are producing efficiently should be protected.
C)government officials can predict which industries will eventually be able to compete with more established foreign producers.
D)the industries protected have substantial monopoly power in the absence of foreign competition.

Question

Quizplus · Accepted Answer

For infant-industry tariff protection to be valid, government officials should be able to predict which industries will eventually be able to compete with more established foreign producers. This is because the purpose of the protection is to give the industry time to develop and become more efficient, so it can compete on equal footing with foreign producers eventually. If the industry is not able to become competitive, the tariff becomes a burden on the consumers, who have to pay higher prices for the protected goods. Therefore, there should be a clear and objective criteria for selecting industries to protect, based on their potential to become competitive in the future.

For Infant-Industry Tariff Protection to Be Valid Requires That