Welfare effects of trade barriers on Malaysian car industry: an alternative approach

This research applies quantitative approach to estimate the cost of protecting the domestic car maker in Malaysia. The approach taken involves investigating factors that influence the demand for domestic and foreign cars in Malaysian, and measuring car buyers' sensitiveness to price changes. Results of this research contribute to manufacturing sector in that product characteristics influence the demand for differentiated goods. Results also suggest that trade barriers may not be effective to reduce imports if foreign product characteristics are attractive and income level in the domestic economy is sufficiently high. The research concludes that trade barriers impose costs on society.