Assuming a firm would not survive without protection, what should the government do if the present value of the profits and value added from operating an infant industry firm exceed the deadweight loss of imposing protection?

Question

Quizplus · Accepted Answer

If the present value of the profits and value added from operating an infant industry firm exceed the deadweight loss of imposing protection, it is economically efficient for the government to impose the tariff. This is because the gains from protecting the infant industry outweigh the losses. However, the government should also ensure that the protection provided is only temporary and that the industry is eventually able to compete on its own.

Assuming a Firm Would Not Survive Without Protection, What Should