Is Limiting imports to benefit local firms detremental to domestic consumers?

Question

well basically my topic is 'Limiting imports to benefit local firms is detremental to domestic consumers'. but i need some information against the topic. so please help

Answer 1

Imports from countries where the wage rate is lower will cause the wages for workers in the importing country to fall. Since the workers are also the consumers the net benefit is controversial. The theory is given at
http://en.wikipedia.org/wiki/Stolper-Samuelson_theorem
The current controversy in the US about trade reflects that wage increases have not kept up with GDP growth for several decades. Whether or not this is due to increased trade is being hotly debated by economists, and in the political arena.

Answer 2

yes, you are correct.

What it does is it keeps the price higher than a free trade price will be.

Local firms make more profits.

Once you allow in imports, the price goes down, there are more goods on the market and a cheaper price. Consumers benefit by a large amount, domestic suppliers sell a lot less of their product at a lower price.

Its worth noting that quotas only benefit the local firm, tarrifs the local firm and the government, while free trade benefits foreign firms and domestic consumers.

The free trade equilibrium provides more total utility than the quota or tarriff equilibrium.

Oh, i have done more reading. Information against the topic. hmm, I am for Free trade, i look for the most utility in any situation. Local firms, local workers, more local jobs, government revenue.

Yea, i got nothing.

Answer 3

absolutely - limiting imports to spare domestic firms is protectionism and is very bad b/c it limits competition...

without competition, firms have no incentive to raise efficiency and lower prices - this definitely hurts the consumer right away but also hurts the firms in the longer run b/c then they are totally unprepared to compete with foreign firms in the global economy