Why there valid argument for protection in given situation

Reference no: EM131917639

Problem

1. Suppose that the firm obtaining protection in a Krugmantype framework has marginal costs that increase rather than decrease with greater production. Would Krugman's results follow if this were true? Why or why not?

2. Suppose that the production technology of a self-proclaimed "infant industry" permits economies of scale. Suppose also that the same technology is available to foreign producers. Is there a valid argument for protection in this situation from the perspective of the world as a whole? Why or why not?

Reference no: EM131917639

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