The United States-Canada softwood lumber trade: An actual versus optimal export tax

Document Type

Article

Publication Date

12-1-2016

Abstract

By developing a two-country two-stage game model, this study examines an optimal level of export tax under the framework of the 2006 United States (U.S.)-Canada Softwood Lumber Agreement (SLA 2006). The theoretical results suggest that marginal lumber production costs in Canada and U.S. lumber production capacity along with linear demand parameters determine an optimum rate of export tax on Canadian lumber exports to the U.S. The empirical estimation reveals that the monthly optimal export tax during the SLA 2006 period follows the actual export tax closely with a monthly rate ranging from −4% to 19%.

Publication Source (Journal or Book title)

Forest Policy and Economics

First Page

112

Last Page

119

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