Welfare Effects of an Export Tax: Thailand's Rice Premium

Abstract An empirically based, applied general equilibrium model is used to study the welfare and distributional effects of an export tax when the implementing country possesses some monopoly power in the world market. A method is demonstrated through which a general equilibrium model can be used to find the optimal value of a tax or subsidy. The approach makes it possible to conduct the welfare analysis of a particular intervention in an explicit “second‐best” context, to study its income distributional implications, and to explore the sensitivity of the results to variations in key behavioral parameters, structural assumptions, and the government's distributional objectives.