Is Free Trade the End All Be All? The Case of Log Exports

The government of British Columbia imposes restrictions on the export of logs from public and private forestlands, primarily to promote local processing and associated employment benefits. Economists wholeheartedly oppose BC’s export restrictions, arguing that BC’s citizens are worse off as a result of the government’s measures. In this paper, it is shown that, while free trade in logs might well maximize global wellbeing, it might not necessarily result in the greatest benefit to British Columbia. Indeed, both economic theory and a follow-up numerical analysis indicate that some restrictions on the export of logs can lead to higher welfare for BC than free trade.