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The Perverse Effects of A Variable Oil Import Fee

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  • David R Henderson

Abstract

If the world oil market is at all monopolistic, then a variable import fee (VIF) has more perverse effects than a flat import fee on the country that imposes it. Like an import quota, a VIF makes the importing country ‘s demand for oil less elastic and increases the price paid by buyers in that country. Moreover, a VIF does not necessarily yield any tariff revenue to the country that imposes it. Finally, under very plausible conditions, a VIF may facilitate price discrimination by a monopolistic foreign producer against the country that imposes it.

Suggested Citation

  • David R Henderson, 1989. "The Perverse Effects of A Variable Oil Import Fee," The Energy Journal, , vol. 10(4), pages 159-171, October.
    • Handle: RePEc:sae:enejou:v:10:y:1989:i:4:p:159-171
    DOI: 10.5547/ISSN0195-6574-EJ-Vol10-No4-10
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