Can Export Taxation Counter Monopsony Power?

Alan Deardorff and Indira Rajaraman
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Indira Rajaraman: National Institute of Public Finance and Policy

No 541, Working Papers from Research Seminar in International Economics, University of Michigan

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.

Keywords: commodity exports; monopsony; oligopsony; optimal export tax (search for similar items in EconPapers)
JEL-codes: F12 F13 H21 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2005
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:541

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