Optimal Export Taxes in a Multicountry Framework

Abstract

Using a computable general equilibrium model of the global cocoa market we analyze optimal export taxes in a multicountry framework. We show that Lerner's symmetry theorem for uniform taxes does not carry to the case of intraindustry trade with non-uniform taxes. Import liberalization in other sectors leads to a decrease, rather than an increase, in the optimal export tax on cocoa. We also show that, because the elasticity of domestic cocoa supply is not constant, the partial equilibrium definition of the optimal export tax does not hold in a general equilibrium model.

JEL Classification: F11, L13, D58