Why is it necessary to use a market failure to justify the


Question: 1. Why is it necessary to use a market failure to justify the use of infant industry protection?

2. What is a positive externality? Explain the argument of knowledge spillovers as a potential reason for infant industry protection.

3. If infant industry protection is justified, is it better for the Home country to use a tariff or a quota, and why?

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Macroeconomics: Why is it necessary to use a market failure to justify the
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