4.1.4 protectionism

protectionism

protecting a country's domestic industries from foreign competition

reasons for protectionism

human nature to protect, want to decrease foreign competition

tariff

a tax placed on an import to increase its price

imposing a tariff will help a country to

protect domestic/aging/inefficient industries

reasons for tariffs

to raise tax revenue, environmental reasons

advantages of tariffs

domestic goods will be cheaper, job security

disadvantages of tariffs

retaliation people may still buy specialised goods, increased costs for consumers

quota

a physical limit on the quantity of good imported/exported

advantages of quotas

decreases a goods' market share

disadvantages of quotas

retaliation, complex/hard to manage

advantages of legislation

prevent fake imports, customers can trust products as they know it is genuine

disadvantages of legislation

every import cannot be check

subsidy

a way of a government protecting their domestic markets

advantages of subsidies

productivity, jobs created, gain economies of scale

disadvantages of subsidies

retaliation possible, encourage business activity which wouldn't be possible without subsidies