THE WELFARE EFFECT OF EXPORT RESTRICTIONS

On September 28, 2006, Ukrainian government introduced licensing of grain exports, which was afterwards replaced with a quota system. The paper adopts the partial equilibrium analysis for empirical evaluation of the effect of export quotas and taxes with 5%, 10%, 15% and 20% rates under the assumption of a “small” county case. For this purpose the paper provides the required domestic demand and supply, and import demand elasticities. On the basis of the estimated price elasticities a quantitative estimation is conducted on the welfare effects of wheat producers, consumers, the government and the country as a whole. The econometric results demonstrate that export quotas are not desirable for national welfare, and export taxes are sound alternatives.