Comes up when the home country equals the amount of

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