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On Optimal British Columbia Log Export Policy: An Application of Trade Theory

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  • Abbott, Brant

Abstract

The log export policy suggestion by Dumont and Wright (2006) is critically assessed in an effort to determine if it is based on economic efficiency. The optimal log export policy for British Columbia is derived using two different models. The first model assumes that B.C. is a small open economy, and the second is a two country model that provides B.C. the opportunity to improve its terms of trade. In both cases it is shown that an optimal log export tax when a fixed lumber export tax exists can be characterized as a problem of second best. In that scenario the optimal log export policy is a positive export tax in both models. In the second model a positive export tax is also optimal when there is no lumber export tax, but it is smaller than when the lumber export tax is levied. In comparison to the log export tax recommended by Dumont and Wright (2006), the optimal tax for a small economy is always lower, while it is lower only in certain circumstances for an economy with market power. These results suggest that the Dumont and Wright policy is not efficient.

Suggested Citation

  • Abbott, Brant, 2008. "On Optimal British Columbia Log Export Policy: An Application of Trade Theory," Working Papers 37084, University of Victoria, Resource Economics and Policy.
  • Handle: RePEc:ags:uvicwp:37084
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    File URL: http://ageconsearch.umn.edu/record/37084/files/WorkingPaper2008-05.pdf
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    Cited by:

    1. Jacob R. Fooks & Steven J. Dundas & Titus O. Awokuse, 2013. "Are There Efficiency Gains from the Removal of Natural Resource Export Restrictions? Evidence from British Columbia," The World Economy, Wiley Blackwell, vol. 36(8), pages 1098-1114, August.

    More about this item

    Keywords

    Environmental Economics and Policy; Resource /Energy Economics and Policy;

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade

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