Market Power and Export Taxes

This paper explores the extent to which market power considerations explain levels of export taxes. Market power is proxied by the inverse import demand elasticities faced by exporters. The paper first provides estimates of market power for exporting countries and products at the 6-digit level of the Harmonized System. It then finds a positive correlation between market power and export taxes. This result supports the theory that, when unconstrained in their trade policy choices, countries take their market power into account when setting their export taxes.

The author is grateful to Jaime de Melo, Marcelo Olarreaga, Peri da Silva, Olga Solleder, two anonymous referees, and to participants at the 2017 ETSG conference and the 9th conference on the economics of global interactions in Bari for their helpful comments and suggestions. The author also gratefully acknowledges support from the French National Research Agency under program ANR-10-LABX-14-01.


European Economic Review.