Welfare Impacts of Imposing a Tariff on Rice in Iran vs an Export Tax in Thailand: A Game Theoretic Approach

Document Type: Research Paper

Authors

1 Ph.D Student in Shiraz University

2 Professor of Agricultural Economics in shiraz University

3 Professor of Economics in Penn State University

Abstract

In this study, the social welfare impacts of the interaction of Iranian rice import policies and Thai export policies are analyzed using a game theoretic approach in conjunction with econometric supply and demand models. The joint impacts of increasing the world price of rice, resulting from the export policies in Thailand along with changes in tariff rates in Iran, on social welfare are analyzed in the two countries. Because Iran is a small country in terms of the volume of world rice trade its policies do not influence Thai social welfare. Results of this study show that in order to maximize its own social welfare, the government should impose a modest tariff rate of approximately 3%. This is much less than the actual tariff rate applied in recent years, e.g. 19% in 2007.

Keywords


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