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The Welfare Effects of Targeted Export Subsidies: A General Equilibrium Approach

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  • Mary Bohman
  • Colin A. Carter
  • Jeffrey H. Dorfman

Abstract

A three-country model of export subsidies is developed with an exporter, an importer, and a neutral country which can act on either side of the market. When the neutral country is an exporter, the country offering a targeted export subsidy always suffers a welfare loss. However, when the neutral country is an importer, the possibility of a paradoxical result—that the subsidizing country can gain and the subsidized country can lose—is shown to exist, and the conditions under which this result occurs are derived. The model fails to provide justification (on national welfare grounds) for widespread use of targeted export subsidies such as the export enhancement program.

Suggested Citation

  • Mary Bohman & Colin A. Carter & Jeffrey H. Dorfman, 1991. "The Welfare Effects of Targeted Export Subsidies: A General Equilibrium Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 693-702.
    • Handle: RePEc:oup:ajagec:v:73:y:1991:i:3:p:693-702.
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    Cited by:

    1. Dahl, Bruce L. & Johnson, D. Demcey & Wilson, William W. & Gustafson, Cole R., 1995. "Credit Guarantee Programs in International Grain Markets: Background and Issues," Agricultural Economics Reports 23331, North Dakota State University, Department of Agribusiness and Applied Economics.
    2. Wang, W. & Wei, L., 2018. "China s Agricultural Price Control Policy and its Price and Welfare Implications: The Case of Soybean," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277342, International Association of Agricultural Economists.
    3. Elbehri, Aziz & Leetmaa, Susan E., 2001. "How Significant Are Export Subsidies To Agricultural Trade? Trade And Welfare Implications Of Global Reforms," 2001 Annual meeting, August 5-8, Chicago, IL 20518, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Svetlana Ledyaeva, 2024. "Third-Country Effects of Export Incentives," Open Economies Review, Springer, vol. 35(1), pages 71-98, February.
    5. Young, Linda M. & Abbott, Philip C. & Leetmaa, Susan E., 2001. "Export Competition: Issues And Options In The Agricultural Negotiations," Commissioned Papers 14624, International Agricultural Trade Research Consortium.
    6. Sheldon, Ian M. & Pick, Daniel H. & McCorriston, Steve, 2001. "Export Subsidies And Profit-Shifting In Vertical Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(1), pages 1-17, July.
    7. Jaouad, Mohamed, 1994. "An agricultural policy and trade model for Morocco," ISU General Staff Papers 1994010108000011483, Iowa State University, Department of Economics.
    8. Wang, Wenting & Wei, Longbao, 2019. "Impacts of agricultural price support policies on price variability and welfare: evidence from China’s soybean market," 2019 Annual Meeting, July 21-23, Atlanta, Georgia 288334, Agricultural and Applied Economics Association.

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