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Optimal Tariffs on Intermediate and Final Goods: The Case of Tropical Forest Products

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Products made from tropical timber are subject to a variety of tariff and nontariff barriers. This paper considers the potential welfare gains from the imposition of optimal (welfare-maximizing) tariffs on these products. Optimal tariffs and associated welfare gains are determined by applying nonlinear programming to a static (single-period), three-region, three-product, partial equilibrium simulation model of the tropical forest products sector. Optimal tariffs are determined for each region both with and without retaliation by other regions. In the case of retaliation, two- and three-region Cournot-Nash equilibria are described. Principal findings are that modest welfare gains are possible in the absence of retaliation, but large losses may result if other regions retaliate. Since tariff revenue is the critical component of the welfare increase, the redistribution of this revenue has important equity implications. For. Sci. 35(3):720-731.

Keywords: Cournot-Nash equilibrium; International trade; nonlinear programming; welfare maximization

Document Type: Journal Article

Affiliations: Assistant Professor, Department of Forestry, Michigan State University

Publication date: September 1, 1989

More about this publication?
  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
    Forest Science is published bimonthly in February, April, June, August, October, and December.

    2015 Impact Factor: 1.702
    Ranking: 16 of 66 in forestry

    Also published by SAF:
    Journal of Forestry
    Other SAF Publications
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