Argument: Infant industries should be protected from free trade

Issue Report: Free trade


  • Melitz, Marc J, “When and How Should Infant Industries Be Protected?”Department of Economics,The University of Michigan October 11, 1999 “First formulated by Alexander Hamilton and Friedrich List at the beginning of the Nineteenth Century, the case for infant industry protection has been generally accepted by economists over the last two centuries. Although some of the arguments supporting protection have come under successful attacks over the years, most economists would nonetheless agree to a list of specific circumstances that would warrant the temporary and limited protection of an infant industry. In his famous statement supporting the case for infant industry protection, John Stuart Mill alluded to one of the main circumstances on this list: the presence of dynamic learning effects that are external to firms.1 Mill recognized that certain additional conditions must also be met in order to justify protection. He specifically mentioned that protection must be temporary and that the infant industry must then mature and become viable without protection.”