When we study government intervention and market failure, we usually think of taxes or subsidies, but this article offers another interesting perspective — trade protection. The UAE has introduced anti-dumping measures after Chinese manufacturers began exporting goods at very low prices, undercutting local producers. This is a great real-world example of how dumping can distort competition by creating artificially low prices that domestic firms can’t match. In theory, these low prices benefit consumers in the short run, but in the long run they may force local firms to shut down, reducing competition and innovation — a form of allocative inefficiency.
By placing tariffs or quotas, the government is attempting to correct this imbalance, though such policies can also risk retaliation or higher prices for consumers. For exams, this connects directly to questions on why governments restrict trade and how intervention can sometimes prevent, but also create, market inefficiencies.
Source: Khaleej Times
