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Protection of infant firms:
Infant industries are those firms, which are young. The absence of economies of scale to them makes their unit cost of production higher than older and efficient firms in other countries. Protection may be justified during the early growth of an infant firm, As the infant firms grow, skills and productivity, as well as economies of scale will grow, so increasing the firm’s relative competitive advantage. To protect domestic labour against cheap foreign labour.The theory comparative cost advantage assumes that factors of production are both fully employed and mobile within countries. If large-scale unemployment exists within a country, protection may be used to increase employment.
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