Competing with the Sun: An Examination of Protectionism and Consumer Welfare in Modern Turkey

By Murat Ustaoğlu

Frederic Bastiat, one of economics' most elegant satirists, consigned the arguments of free trade opponents to the dusty shelves of history with a single allegory in his 1845 “Petition from the Candlemakers.” In the petition, candle makers appeal to the government for protection against an “unfair competitor.” This competitor is the sun, which illuminates everything at no cost and undermines candle sales. The producers demand that all windows be closed, curtains drawn, and sunlight prohibited from entering buildings. Their argument is familiar: if windows are closed, more candles will be produced, more workers will be employed, and the economy will flourish.

With this absurdity, Bastiat shows that protectionism actually rewards inefficient producers at the expense of consumers, rather than promoting social welfare. Today in Turkey, many restrictions, from Booking.com to Uber, from Airbnb regulations to e-commerce platforms like Temu, are actually modern attempts to “close the windows.”

Modern Shackles: Consumer Loss Under the Mask of Localism

In today's economic politics, Bastiat's sun is digital platforms and global e-commerce networks. The access barriers and heavy customs duties we have witnessed in Turkey in recent years are usually presented under the guise of “protecting local businesses” or “preventing unfair competition.”

For example, the restriction imposed on Booking.com came into effect in 2017 following a lawsuit filed by the Association of Turkish Travel Agencies (TÜRSAB). Behind the court's decision lies not only the motive of protecting local travel agencies, but also the fact that Booking.com operates without a registered office in Turkey, thereby competing with local rivals without incurring tax obligations. On the other hand, the scope of the ban is not a “complete access ban,” as is often believed by the public: The platform has only blocked reservations made from Turkey for hotels within Turkey. Visitors from abroad have continued to make reservations for Turkish hotels, and Turkish users have continued to make reservations for foreign hotels through Booking.com during this process. Therefore, the claim that “the door to the world for domestic hoteliers has been completely closed” does not fully reflect the reality; however, Turkish consumers have been effectively prevented from searching for accommodation options in their own country through the platform, and consumer welfare has been seriously undermined. [i]

Similarly, pressure on Uber, as a result of lobbying by taxi operators, has hampered innovation in transportation services for years. Recently, lowering overseas shopping limits and increasing tax rates on platforms like Temu is a subsidy for inefficient local retailers trying to protect their market share by preventing low-income consumers from accessing cheap goods.

The fundamental problem with these restrictions is that they push consumer welfare (consumer surplus) into the background. Economic efficiency means channeling scarce resources to areas that create the highest value. If a platform can offer a service cheaper and with higher quality, banning it makes society poorer.

Absence of Competition: Poor Quality and Inflationary Spiral

Competition is the toughest but fairest arbiter of the free market. When competition disappears in a sector or is restricted by artificial barriers, innovation stops. The taxi problem in Turkey is the most concrete example of this. When technological competitors (Uber, etc.) are pushed out of the system, existing actors lose their motivation to improve vehicle quality, improve behavior models, or invest in technological infrastructure.

This situation leads not only to lower quality but also to artificial price increases. Where there is no competition, producers become price makers. In an economy like Turkey's, which is struggling with high inflation, this pushes up the general level of service and goods prices, increasing inflationary pressure.

Another motivation behind the bans is the fear of technological unemployment. Similar to the Luddites breaking machines, there is a prevailing concern that digital platforms will eliminate traditional industries. However, economic history has shown that while technology eliminates some industries, it creates new, much higher value-added areas. Banning technology means being trapped in low-efficiency production models and being pushed out of the global value chain.

Economic Analysis: Deadweight Loss and Opportunity Cost

When we analyze Turkey's protectionist reflexes within an academic framework, the picture that emerges is quite costly:

Consumer Rent and Deadweight Loss: Customs duties or bans deprive consumers of a product they could have purchased at a lower price. The producer's gain is always smaller than the consumer's loss. The difference is deadweight loss that goes nowhere in the economy.

Opportunity Cost: Every platform that is banned is a missed growth opportunity. When Booking.com is restricted, the foreign currency that a Japanese tourist, whom a boutique hotel could never reach, would have spent is the invisible opportunity cost of this ban.

Capital Inflow and Confidence: A market that bans or constantly changes the rules for digital economy players creates an unpredictable environment for foreign direct investment (FDI). The moment an investor asks, “Will my sector be next to be banned?”, capital flight begins.

Speed of Digital Transformation: With its young population, Turkey is one of the countries most amenable to digitalization. However, subjecting models such as Airbnb to heavy regulation slows down the development of modern financial structures such as the “sharing economy.”

Conclusion: Time to Open the Windows

Economic growth is possible not by preserving the status quo, but by adapting to processes of creative destruction that break it down. Bastiat's candle makers could have protected their jobs in the short term by closing the windows; however, this meant plunging the French people into darkness and paying an excessive price for enlightenment.

What Turkey needs today is not to isolate local producers from global competition and make them sluggish, but to create incentives and the legal infrastructure that will enable local producers to open up to the world using these platforms. Prohibitions are a temporary illusion; the free market and technological adaptation are the only path to sustainable prosperity. Instead of fearing the “sunlight,” Turkey should focus on installing solar panels that will yield the highest efficiency from that light.

[i] The current situation of Booking.com further highlights the tension between protectionism and concerns about equal competition. The company paved the way for the removal of restrictions on the platform by opening an official office in Turkey in 2021 and agreeing to pay approximately 7-7.5% tax on its revenue. This development shows that the restriction in question was not purely protectionist; it was partly an effort to bring a platform that wanted to be subject to the same obligations as its competitors paying taxes domestically into the legal framework. Indeed, the solution to this process was achieved not through a ban, but through the platform's integration into market conditions and the tax regime. This situation points to the inadequacy of assessing the issue solely on the axis of “protectionism vs. free trade” and highlights how critical a level playing field is for digital platforms.