Edited by William A. Kerr and James D. Gaisford
Ryan Scholeﬁeld and James Gaisford Introduction Governments use a variety of trade policy instruments to aﬀect cross-border trade ﬂows. This chapter examines export taxes. An export tax is a tax or tariﬀ that a domestic country imposes upon its own products before they are shipped abroad. In addition to enabling a domestic government to collect revenue on exports, an export tax drives the domestic price below the world price. There are numerous political motivations for imposing export taxes, which tie in with the reduction in the domestic price change, and a potential national welfare rationale for export taxes, which is associated with a possible increase in the world price. We begin with a general theoretical overview of how an export tax works. As in the case of import tariﬀs, which were discussed in several preceding chapters, the impact of an export tax on national welfare depends on whether a country is large enough to have some inﬂuence upon the world price or whether it is suﬃciently small that its eﬀect is negligible. Consequently, for countries that are able to aﬀect the world price, there is an optimum export tax, which is analogous to the optimum import tariﬀ. Regardless of whether an export tax aﬀects the world price, the decline in the domestic price creates winners and losers in the domestic economy. We provide a simple example of such winners and losers using a standard two-factor, two-good (Heckscher-Ohlin) framework where the StolperSamuelson Theorem...
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