comes up when the home country equals the amount of the tax which brought about when (Pm1 – Pm2) * and the number of exports (Qx1) are multiplied. Large countries have an advantage when they to charge export tax on commodity Y because then the local market is able to consume the product and producers will get back their reward but for a small country the domestic market is too small to sustain the market for commodity Y and the international price may be too high to generate favorable returns which in the long may kill the export business in a small nation. Let us consider the Chinese market for instance. China is a tech nation that has many smartphone companies. The population in China is in billions they have a big local market that is capable of satisfying the demand. Comparing China to a country like Rwanda in East Africa looks like a big joke which has a very tiny population that can not sustain the demand. China can function just fine without the export business for tiny countries it is close to impossible since the small populations cannot maximize whatever is being produced.
SUPPLY AND DEMAND 6 References Welfare Effects of an Export Tax: Thailand's Rice Premium American Journal of Agricultural Economics , Volume 83, Issue 4, November 2001, Pages 903– 920, The Welfare Effect Of Export Restrictions: The Case Of Ukrainian Market For Wheat by Ganna Kuznetsova. National University “Kyiv-Mohyla Academy” Economics Education and Research Consortium Master’s Program in Economics. 2007
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