Monday, June 20, 2011

Yes, Removing Import Barriers Lowers Prices

In light of protests in Israel over the relatively high prices of cottage cheese, Prime Minister Benjamin Netanyahu now opens up for removing import barriers.

That seems like a smart move. If you exclude foreign competition, then you are bound to get artificially high prices. That is because first of all, some foreign companies may produce at lower costs and even if they aren't, the exclusion of foreign competition will enable local companies to have greater margins.

And as much as local producers might like that, it is bad for consumers and for the overall economy


Blogger Jim Slip said...

It's also bad for unemployment when local producers can't compete with foreign producers from currency manipulating countries.

3:35 PM  

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