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Infant Industry Argument
Advocates of this maintain that if an industry is just developing, with a good chance of success once it is established and reaping economies of sale, then is it necessary to protect it from competition temporarily until it reaches levels of producdton and cost which allow it to compete with established industries elsewhere, until it can "stand on its own feet". The argument is most commonly used to justify the high level of protection that surrounds the manufacturing industry in developing countries, as they attempt to replace foreign goods with those made in their own country ("import substitution").
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Infant Industry Argument Advocates of this maintain that if an industry is just developing, with a good chance of success once it is established and reaping economies of sale,
A firm hires two risk-neutral workers to assemble bicycles and pays $20 for each assembly.Charlie's marginal cost of allocating effort (measured in dollars) to the production proce
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