Although little is known about the amounts rebated to individual importers, the aggregate annual
value of export tax rebates, Α, is known. The average annual unit rebate paid per bag of coffee
exported to the member market, α, can be determined by dividing Αby qA, where qA is the
number of bags exported to the member market, i.e. α = A/qA. The government’s net export tax
revenue per bag was tcq - α.
Although the government paid a unit tax rebate, α, to foreign importers, I hypothesize
that these importers did not benefit in like amount because the rebates reduced the net price of
Brazilian coffee and thus stimulated importers to purchase more coffee, resulting in a higher
market price. In the extreme case, the export tax rebate could have increased the nominal
Brazilian export price by α, leaving the net export price faced by importers unchanged. It is
generally understood in Brazil that this is what happened. However, if Brazil’s nominal export
price rose by less than α, foreign roasters enjoyed some net gain, a’, where a’ = α - (PA’ - PA).
Again, see Figure 1.
The economic gains enjoyed by exporters, foreign roasters and the federal government
given their participation in the domestic quota rent was their unit gain multiplied by quota
exports. These gains can be expressed as:
1) Exporters: RE = (rg - tcq) qA
2) Foreign roasters: Α = [a - (PA’ - PA)] qA
3) Federal Government, including the IBC: T = (tcq - a) qA
IBC officials participated privately in the rent if they received side payments that were linked to
exporters’ or roasters’ gains. Since there is no way to measure such clandestine payments, if
they occurred, their magnitude is included in the estimated gains of exporters and foreign