Welfare implications of commodity price stabilization under export restrictions

Abstract

This article analyzes in a two-country framework the welfare implications of domestic and international price stabilization under alternative fixed-value export restriction devices designed to exercise market power - ad valorem export tax, quota and fixed-price to exporter. The effects of domestic price stabilization on welfare and its distribution - between countries and between groups within a country - are shown to differ from those under continuous optimal adjustments. The distribution of gains and losses from both domestic and international price stabilization generally depends on the source of instability, but results may differ according to the instrument used to restrict export. © 1990.