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The Perverse Effects of A Variable Oil Import Fee

David R Henderson

The Energy Journal, 1989, vol. Volume 10, issue Number 4, 159-170

Abstract: If the world oil market is at all monopolistic, then a variable import fee (VIF) has more perverse effects than a flat import fee on the country that imposes it. Like an import quota, a VIF makes the importing country's demand for oil less elastic and increases the price paid by buyers in that country. Moreover, a VIF does not necessarily yield any tariff revenue to the country that imposes it. Finally, under very plausible conditions, a VIF may facilitate price discrimination by a monopolistic foreign producer against the country that imposes it.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 1989
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Handle: RePEc:aen:journl:1989v10-04-a10