Raw Materials, Processing Activities, and Protectionism

Ronald Jones and Barbara Spencer

Canadian Journal of Economics, 1989, vol. 22, issue 3, 469-86

Abstract: A country's export sector may encompass a raw material, as well as a final commodity that processes that raw material. A general equilibrium model is developed in a competitive setting to analyze a nation's optimal strategy in restricting raw materials exports when allowance is made for potential beneficial effects on the export price of processed goods. When faced with a foreign tariff on exports of the processed commodity, a country's optimal response could entail an easing of raw materials export constraints instead of retaliation. Illustrations are provided of the 1986 American tariff on Canadian exports of cedar shakes and shingles.

Date: 1989
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Working Paper: RAW MATERIALS, PROCESSING ACTIVITIES AND PROTECTIONISM (1988)
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