Can Indonesia benefit from log export barriers?
Arunanondchai, May (2002) Can Indonesia benefit from log export barriers? Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers).
WRAP_Arunanondchai_twerp619a.pdf - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
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 of Pages:||33|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|Description:||Original version, December 2001; this revision, December 2002|
|References:|| M. Abiru. Vertical integration, variable proportions and successive oligopolies. Journal of Industrial Economics, 36(3):315–325, March 1988.  E.B. Barbier, J.C. Burgess, J.T. Bishop, and B.A. Alyward. The Economics of Tropical Timber Trade. Earthscan Publications, London, 1 edition, 1994.  J.A. Brander and B.J. Spencer. Export subsidies and international market share rivalry. Journal of International Economics, 18:83–100, 1985.  J.I. Bulow, J.D. Geanakoplos, and P.D. Klemperer. Multimarket oligopoly: Strategic substitutes and complements. Journal of Political Economy, 93(3):488–511, 1985.  J. Eaton and G. M. Grossman. Optimal trade and industrial policy under oligopoly. Quarterly Journal of Economics, 101:383–406, 1986.  G. Gaudet, N. van Long, and A. Soubeyran. Upstream-downstream specialisation by integrated firms in a partially integrated industry. Review of Industrial Organisation, 14:321–335, 1999.  M.L. Greenhut and H. Ohta. Vertical integration of successive oligopolists. American Economic Review, 69(1):137–141, March 1979.  T. Lewis, R. Lindsey, and R. Ware. Long-term bilateral monopoly: The case of an exhaustible resource. Rand Journal of Economics, XVII:89–104, 1986.  E.G. Togu Manurung and J. Buongiorno. Effects of the ban on tropical log exports on the forestry sector of Indonesia. Journal of World Forest Resource Management, 8:21–49, 1997.  R. Repetto and M. Gillis. Public Policies and the Misuse of Forest Resources. Cambridge University Press, Cambridge, 1988.  M.A. Salinger. Vertical mergers and market foreclosure. Quarterly Journal of Economics, 103:345–356, 1988.  B.J. Spencer and R.W. Jones. Vertical foreclosure and international trade policy. Review of Economic Studies, 58:153–170, 1991.  B.J. Spencer and R.W. Jones. Trade and protection in vertically related markets. Journal of International Economics, 32:31–55, 1992.  J.R. Vincent. Optimal tariffs on intermediate and finalgo ods: The case of tropical forest products. Forest Science, 35(3):720–731, 1989.|
Actions (login required)