Read the given passage and answer the questions that follow

One argument of protection that stands up to close economic scrutiny is the infant‐industry argument. It holds that a nation may have a potential comparative advantage in a commodity, but because of lack of knowledge and the initial small level of output, the industry cannot successfully compete with more established foreign firms. The infant‐industry argument for protection is correct but requires several important qualifications. First, such an argument is more justified for developing nations, where capital markets may not function properly. Second, as experience has shown that protection, once given, is difficult to remove. Third, what trade protection in the form of import tariff can do an equivalent production subsidy to the infant industry can do better. The reason is that a purely domestic distortion such as this should be overcome with a purely domestic policy such as direct production subsidy to the infant industry. A production subsidy is also a more direct form of aid and it is easier to remove than an import tariff. A better policy would be to provide a direct subsidy to the industry. Similarly, a direct tax would also be better than a tariff to discourage activities that give rise to external diseconomies because the tax does not distort relative prices and consumption.