Second-best argument for protection

Second-best argument for protection

1. Any argument for protection that can be countered by pointing to a different and less distortionary policy that would achieve the same desired result at lower economic cost. 2. An argument for protection to partially correct an existing distortion in the economy when the first-best policy for that purpose is not available. For example, if domestic production generates a positive externality and a production subsidy to internalise it is not available, then a tariff may be second-best optimal.

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Part of Speech: noun
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Industry/Domain: Economy
Category: International economics
Company: University of Michigan
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