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Optimal Tariffs with Smuggling: A Spatial Analysis of Nigerian Rice Policy Options

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  • Johnson, Michael
  • Dorosh, Paul

Abstract

This paper assesses the difficulties inherent with raising the rice import tariff in Nigeria given the problem of smuggling, and under such conditions, whether there is an optimal tariff rate that the Nigerian government can consider, especially when the effects are likely to vary by location. Using a spatial multi-market model for rice, results show that an optimal tariff rate of 37 percent does exist if smuggling cannot be controlled. The effects of higher tariffs can have different effects on price changes, trade flows, and ultimately, household welfare in different parts of the country. Most notably but not surprising, consumers in the south could face much higher welfare losses, especially in urban areas as prices increase more when imports flow in from the north. On the other hand, smuggled imports in the north actually help dampen the effect of the tariff on prices in this region and in the central region.

Suggested Citation

  • Johnson, Michael & Dorosh, Paul, 2015. "Optimal Tariffs with Smuggling: A Spatial Analysis of Nigerian Rice Policy Options," 2015 Conference, August 9-14, 2015, Milan, Italy 211816, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:211816
    DOI: 10.22004/ag.econ.211816
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    References listed on IDEAS

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    1. Kym Anderson & Will Martin, 2009. "Distortions to Agricultural Incentives in Asia," World Bank Publications - Books, The World Bank Group, number 2611, December.
    2. Rutherford, Thomas F., 1995. "Extension of GAMS for complementarity problems arising in applied economic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1299-1324, November.
    3. Kym Anderson & William A. Masters, 2009. "Distortions to Agricultural Incentives in Africa," World Bank Publications - Books, The World Bank Group, number 2607, December.
    4. Kym Anderson, 2009. "Distortions to Agricultural Versus Nonagricultural Producer Incentives," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 55-74, September.
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    Cited by:

    1. Patrick L. Hatzenbuehler & Philip C. Abbott & Tahirou Abdoulaye, 2017. "Price Transmission in Nigerian Food Security Crop Markets," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 143-163, February.
    2. Robert Ugochukwu Onyeneke & Chukwuemeka Chinonso Emenekwe & Mark Umunna Amadi & Jane Onuabuchi Munonye & Chukwudi Loveday Njoku & Chibuzo Uzoma Izuogua, 2020. "Demand analysis of rice in Nigeria: application of quadratic almost ideal demand system model," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 10(1), pages 364-378, June.
    3. Amolegbe, Khadijat B. & Upton, Joanna & Bageant, Elizabeth & Blom, Sylvia, 2021. "Food price volatility and household food security: Evidence from Nigeria," Food Policy, Elsevier, vol. 102(C).

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    Agricultural and Food Policy; International Relations/Trade;

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