Several arguments are advanced to justify a policy of protection. Haberler has classified these arguments into two groups: 1. Economic Arguments 2. Non-Economic Arguments. These arguments are analysed below: 1. Economic Arguments: The principal economic arguments in support of a protectionist commercial policy are as follows: (i) Infant Industry Argument: The most effective, accepted and sustained argument in support of [...]
The factor price equalisation theorem suggests a even if the mobility of factors is limited by national frontiers, free trade in commodities helps to even out disparities in demand relative to supply of factors, and to diminish the discrepancy between factor returns among countries. Two or more countries sharing the same technology will find that free trade brings factor returns [...]
In this article we will discuss about the advantages and disadvantages of free trade. Advantages of Free Trade: The advocates of free trade put forward the following advantages of free trade: (a) International Specialization: Free trade causes international specialisation as it enables the different countries to produce those goods in which they have comparative advantage. International trade enables countries to [...]