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INFANT INDUSTRY ARGUMENT
(Click above to download a pdf copy of the paper)
- Abstract: Infant industry tariff protection works whenever cost reduction due to learning effects are sufficiently strong relative to the discount rate. In addition such a policy needs to be time consistent to avoid future deviations. When using Markov strategies, a time consistent tariff protection policy will eventually open the economy to free trade.
- Publication: In Kenneth Reinert and Ramkishen Rajan
(eds.): The Princeton Encyclopedia of the World Economy, Princeton University Press, 2008.
- JEL: C63, D43, D82.
- First version: December 2006.
- Final version: March 2008.
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