second-best argument for protection



  • Any argument for protection that can be countered by pointing to a different and less distortionary policy that would achieve the same desired result at lower economic cost.
  • An argument for protection to partially correct an existing distortion in the economy when the first-best policy for that purpose is not available. For example, if domestic production generates a positive externality and a production subsidy to internalize it is not available, then a tariff may be second best optimal.