Optimal Tariffs with Smuggling: A Spatial Analysis of Nigerian Rice Policy Options

This paper assesses the difficulties inherent with raising the rice import tariff in Nigeria given the problem of smuggling, and under such conditions, whether there is an optimal tariff rate that the Nigerian government can consider, especially when the effects are likely to vary by location. Using a spatial multi-market model for rice, results show that an optimal tariff rate of 37 percent does exist if smuggling cannot be controlled. The effects of higher tariffs can have different effects on price changes, trade flows, and ultimately, household welfare in different parts of the country. Most notably but not surprising, consumers in the south could face much higher welfare losses, especially in urban areas as prices increase more when imports flow in from the north. On the other hand, smuggled imports in the north actually help dampen the effect of the tariff on prices in this region and in the central region.


Issue Date:
2015
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/211816
Total Pages:
31




 Record created 2017-04-01, last modified 2017-08-28

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