The effect of all this is that domestic firms are scrambling to react.

This will result in downward pressure on prices as domestic firms face foreign competition.

The exception permits small businesses to provide any domestic firm's product.

The intention was to give the domestic firms time to adjust to a changed competitive context.

The game with no government subsidy to the domestic firm is shown in Figure 1 on the left.

A subsidy however has the effect of shifting the domestic firm's best response function to the right.

Because its output is subsidized the domestic firm increases production.

That shut down a big source of profits for foreign and domestic firms.

The tariff shifts profits from the foreign to the domestic firm.

Another critique focuses on the fact that one nation's citizens may own stock in both domestic and foreign firms.