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Is there a case for an optimal export tax on perennial crops?

Author

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  • Takamasa Akiyama

Abstract

The idea of an optimal export tax on a commodity is based on the assumption that by imposing a tax, a country can improve its welfare whenit faces a downward-sloping demand curve for the commodity. The idea is thought to be particularly relevant to producers with large world market shares for primary commodities for which the price elasticity of demand is low. An export tax is considered necessary because the scattered farmers'expected marginal revenue is higher than the marginal revenue of the country as a whole. The author uses a model to calculate the optimal tax and to evaluate the effect of the tax and other factors on welfare. Simulation results show that the optimal level of the export tax depends on how farmers and government form their expectations of future prices. The author found that the tax is indeterminate when the government does not know how farmers form their expectations and when farmers'expectations are independent of recent prices or taxes. The author concludes that in imposing an export tax on perennials, a government should give less consideration to the tax's optimality and more to how the tax affects welfare distribution and long-term production.

Suggested Citation

  • Takamasa Akiyama, 1992. "Is there a case for an optimal export tax on perennial crops?," Policy Research Working Paper Series 854, The World Bank.
    • Handle: RePEc:wbk:wbrwps:854
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    References listed on IDEAS

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    1. Robert Repetto, 1972. "Optimal Export Taxes in the Short and Long Run, and an Application to Pakistan's Jute Export Policy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 86(3), pages 396-406.
    2. Newbery, David M, 1989. "The Theory of Food Price Stabilisation," Economic Journal, Royal Economic Society, vol. 99(398), pages 1065-1082, December.
    3. Akiyama, T. & Trivedi, P. K., 1987. "Vintage production approach to perennial crop supply : An application to tea in major producing countries," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 133-161.
    4. Bateman, Merrill J. & Meeraus, Alexander & Newbery, David M. & Okyere, William Asenso & O'Mara, Gerald T., 1990. "Ghana's cocoa pricing policy," Policy Research Working Paper Series 429, The World Bank.
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    Cited by:

    1. Rifin, Amzul & Nauly, Dahlia, 2013. "The Effect of Export Tax on Indonesia’s Cocoa Export Competitiveness," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152175, Australian Agricultural and Resource Economics Society.
    2. Burger, Kees, 2008. "Optimal export taxes – the case of cocoa in Cote d'Ivoire," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6395, European Association of Agricultural Economists.
    3. Mohamad F. Hasan & Michael R. Reed & Mary A. Marchant, 2001. "Effects of an Export Tax on Competitiveness: The Case of the Indonesian Palm Oil Industry," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 26(2), pages 77-90, December.
    4. Akiyama, Takamasa & Larson, Donald F. & DEC, 1994. "The adding-up problem : strategies for primary commodity exports in sub-Saharan Africa," Policy Research Working Paper Series 1245, The World Bank.
    5. Kala Krishna, 1998. "The adding up problem: a targeting approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 7(2), pages 151-173.
    6. Akiyama, Takamasa & Baffes, John & Larson, Donald F. & Varangis, Panos, 2003. "Commodity market reform in Africa: some recent experience," Economic Systems, Elsevier, vol. 27(1), pages 83-115, March.
    7. Schiff, Maurice, 1995. "Commodity exports and the adding-up problem in LDCs: Trade, investment and lending policy," World Development, Elsevier, vol. 23(4), pages 603-615, April.
    8. Olga Solleder, 2013. "Panel Export Taxes (PET) Dataset: New Data on Export Tax Rates," IHEID Working Papers 07-2013, Economics Section, The Graduate Institute of International Studies.
    9. Amzul Rifin, 2015. "The Impact of Export Tax Policy on Cocoa Farmers and Supply Chain," The International Trade Journal, Taylor & Francis Journals, vol. 29(1), pages 39-62, March.

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