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 (No.619).
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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|
|Official Date:||9 December 2002|
|Number of Pages:||33|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
Original version, December 2001; this revision, December 2002
 M. Abiru. Vertical integration, variable proportions and successive oligopolies. Journal of Industrial Economics, 36(3):315–325, March 1988.
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