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Possible models: Strategic trade theory, Krugman model, Rybczynski theory, Stolper-samuelson and Heckscher-Ohlin model and the optimal tarriff theory.
a. Describe some models that forecast the effect that reducing protection (Tariffs) will have on factor prices (Labour and capital)? Use these models to analyse the effect that reducing protection would have had on factor prices in Australia? How plausible are these models?
b. Under what circumstances can reducing protection make a country as a whole worse off? Could such models have any relevance to the Australia?
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