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Tariffs, Smuggling and Economic Welfare: A Spatial Analysis of Nigerian Rice Policy Options

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  • Michael E. Johnson
  • Paul Dorosh

Abstract

In this paper, we analyse the welfare implications of alternative tariff rates in Nigeria given the government's goals of spurring domestic production and reducing imports utilising a spatial multi-market model that explicitly takes into account the potential for smuggling. Because smuggling occurs through the diversion of imports from the official port of entry in the south to the north, our modelling framework also captures the spatial effects of higher tariffs on changes in rural and urban prices, production and consumption, the flow of trade, and welfare, across different parts of the country. Results show that tariff rates that exceed about 40% introduce some smuggling through the north when it becomes more profitable than importing through official channels in the south. It is also at this tipping point that government tariff revenues are maximised. At higher tariff rates with smuggling, the south experiences greater welfare losses, especially in urban areas.

Suggested Citation

  • Michael E. Johnson & Paul Dorosh, 2017. "Tariffs, Smuggling and Economic Welfare: A Spatial Analysis of Nigerian Rice Policy Options," Journal of African Economies, Centre for the Study of African Economies, vol. 26(4), pages 516-538.
    • Handle: RePEc:oup:jafrec:v:26:y:2017:i:4:p:516-538.
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    File URL: http://hdl.handle.net/10.1093/jae/ejx008
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    Citations

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    Cited by:

    1. Durand-Morat, Alvaro & Diagne, Mandiaye & Wailes, Eric, 2018. "Impact of ECOWAS Common External Tariffs on Food Security and Nutrition in West Africa," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266618, Southern Agricultural Economics Association.
    2. Ozoh, Joan Nwamaka & Amaka, G. Metu & Madueke, Chinwe, Monica & Monica and Chika Maureen, Okaforocha, 2023. "Common External Tariff and Household Welfare in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(5), pages 108-119, May.
    3. Patrick L. Hatzenbuehler & George Mavrotas, 2021. "Combining household and price data to target food marketing interventions in Nigeria," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 13(2), pages 493-505, April.
    4. Johnson, Michael E. & Farris, Jarrad & Morgan, Stephen & Bloem, Jeffrey R. & Ajewole, Kayode & Beckman, Jayson, 2022. "Africa's Agricultural Trade: Recent Trends Leading up to the African Continental Free Trade Area," USDA Miscellaneous 333528, United States Department of Agriculture.

    More about this item

    Keywords

    tariff policy; smuggling; spatial market equilibrium model; rice; Nigeria;
    All these keywords.

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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