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Can Export Taxation Counter Monopsony Power?

Author

Listed:
  • Alan Deardorff

    (University of Michigan)

  • Indira Rajaraman

    (National Institute of Public Finance and Policy)

Abstract

This paper explores the implications for trade policy of buyer concentration in markets for primary commodity exports of developing countries. Simple partial equilibrium models of monopsony and oligopsony show that the best available policy for the exporting country may be to tax exports so as to extract some of the profits of the monopsonist, even though doing so actually worsens the distortion caused by the buyer’s market power. The paper also explores the general equilibrium implications of these results for factor markets and for patterns of trade.

Suggested Citation

  • Alan Deardorff & Indira Rajaraman, 2005. "Can Export Taxation Counter Monopsony Power?," Working Papers 541, Research Seminar in International Economics, University of Michigan.
  • Handle: RePEc:mie:wpaper:541
    as

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    File URL: http://fordschool.umich.edu/rsie/workingpapers/Papers526-550/r541.pdf
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    Cited by:

    1. Antoine Bouët & David Laborde Debucquet, 2012. "Food crisis and export taxation: the cost of non-cooperative trade policies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(1), pages 209-233, April.

    More about this item

    Keywords

    commodity exports; monopsony; oligopsony; optimal export tax;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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