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PROTECTIONISM (FOR (4) Other reasons (a) Protection of strategic…

- - - - 1) Accusations of dumping may not be true as foreign firms may just be more efficient and have more competitive prices.
      - 2) The ultimate cost of protection is borne by domestic consumers with loss of consumer welfare.
      - Countries may use dumping as a convenient excuse for protectionism.
- - - - 1) Retaliation by other countries may occur.
      - 2) Effectiveness of tariffs depends on PED of imports.
      - 3) Ultimate cost of protectionism is borne by consumer welfare loss.
      - 4) Dead-weight loss also exists, leading to inefficient allocation of resources.
  - - - 1) The domestic industry may become complacent and inefficient if protectionism is implemented as a long-term measure.
      - 2) The government may end up protecting industries that fail to develop a comparative advantage.
      - 3) No definitive method of identifying genuine and potential infant industry
  - - - 1) Slows down restructuring process and prolongs inefficient allocation of resources.
      - 2) Removal of protectionism may be met with resistance in the future.