Optimal export taxes in a multicountry framework

This paper extends the optimum export tax analysis to multicountry partial (PE) and general equilibrium (GE) frameworks, using a computable general eq uilibrium (CGE) model of the global cocoa market. Analyzing myopic optimum, Nash optimum and Nash revenue maximizing taxes, we show that optimum and r evenue maximizing taxes obtained in the GE framework differ from their PE c ounterparts, as they are determined not only by the elasticity of the resid ual demand curve facing the country, but by domestic supply conditions as w ell. Second, not only are Nash revenue maximizing taxes higher than Nash op timum taxes in the GE, but, paradoxically, the society attains a higher lev el of welfare under Nash revenue maximizing taxes than under Nash optimum t axes. Finally, we show that the frequent use of Lerner symmetry [Lerner, A. P., 1936. The symmetry between import and export taxes. Economica 11, 306-3 13.] in the policy-oriented analysis of optimum export taxes is not warrant ed. (C) 1999 Elsevier Science B.V. All rights reserved.