Ban on Exports

Export-related measures refer to all measures applied by the government of the

exporting country including both technical and non-technical measures. Ban on exports
or export bans, and/or restrictions is one of these. Take for example, during periods of
shortages, export of agricultural products such as onion, wheat etc. may be prohibited
to make them available for domestic consumption. Export restrictions have an important
effect on international markets. By reducing international supply, export restrictions
have been shown to increase international prices.

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Ban on exports or export bans are efforts to isolate a market and delink it from
developments in the world market. Usually, it is a provision, usually in a contract
between a supplier and a dealer, by which the supplier seeks to prevent the dealer from
selling the products covered by the agreement outside the dealer’s allocated sales
territory.

An export restriction may be imposed:

 To prevent a shortage of goods in the domestic market because it is more profitable to

export
 To manage the effect on the domestic market of the importing country, which may
otherwise impose antidumping duties on the imported goods
 As part of foreign policy, for example as a component of trade sanctions
 To limit or restrict trade to embargoed nations.
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The economic impact of export restrictions

The economic impact of the export restrictions depends on the size of the exporter. There are two
types of exporters: small exporter (small country), and large exporter (large country). For a small
exporter, export restrictions do not affect world market price but rather the domestic price. When
there are restrictions on exported goods, the price of exported goods rise, therefore, export
decreases and domestic good prices fall. This market failure is beneficial for consumers and is a
disadvantage for producers. On the other hand,
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large exporter has the advantage of affecting the world price. When market prices rise due to export
restrictions, the exporter gains from this high price of the goods it exports.
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Welfare impact of export restrictions

Restriction in export causes welfare loss in the national and international levels but the impact of
these restrictions differs according to the elasticity of demand and supply of the exported goods and
the kind of export restriction measures applied. These welfare losses could be very high when
quantitative export restriction measures are applied when there is prohibitions on certain goods that
have a low price elasticity of demand, or when there is export taxes on good with very high elasticity
of demand. If supply is inelastic, export restrictions of supply increase the price of the good exported
on a global level in the short run. However, in the long run, welfare losses will decrease because
supply and demand curves will eventually adjust.