Arunanondchai, May (2002) Can Indonesia benefit from log export barriers? Working Paper. University of Warwick, Department of Economics, Coventry.

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Abstract

We use a simple model of sequential duopoly to examine the effect of different industrial structures on firms' output decision and profit shares in the international market for raw and processed tropical timber products. The model provides insights that can be applied to the Indonesian logging and plywood industry: shedding light on the appropriate policy responses. Whether optimal trade policy in each industry involves a tax or subsidy depends on the ownership structure and on the comparative profit margins from upstream and downstream exports. Log barriers may improve welfare even if the downstream sector is inefficient. When the industry is vertically separated, this is true regardless of the comparative profit margins. However, when the industry is vertically integrated (which is the case of Indonesia), this is only true when the downstream sector is more profitable at the margin.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HC Economic History and Conditions D History General and Old World > DS Asia S Agriculture > SD Forestry
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Export controls -- Indonesia, Logging -- Indonesia, Foreign trade regulation, International trade
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	9 December 2002
Number:	No.619
Number of Pages:	33
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Description:	Original version, December 2001; this revision, December 2002
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URI:	http://wrap.warwick.ac.uk/id/eprint/1570

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