Final answer:
Under protectionism, the domestic producers and import-competing companies win by gaining protection from foreign competition, whereas domestic consumers lose due to higher prices. The government may see short-term gains but the economy loses long-term benefits like comparative advantage.
Step-by-step explanation:
When protectionism is used by a country, the winners and losers vary. Protectionism is a policy where a government imposes tariffs, quotas, or other restrictions on imported goods to protect domestic industries. Under protectionism, domestic producers and import-competing companies are the primary winners. They benefit from reduced competition from foreign businesses, which can lead to greater sales and potential job creation in the domestic market. However, domestic consumers typically lose as they face higher prices for goods due to tariffs and less variety of products.
While the government may gain some revenue from tariffs and appear to protect domestic jobs, the overall economy may suffer due to a loss of efficiency and economic gains that derive from comparative advantage, specialized learning, and economies of scale. Foreign businesses are also losers under protectionism as their access to the market is limited and may have to deal with retaliatory measures from their own or other governments.