First-Best and Second-Best Policies of Pricing an Imported Input: The Case of Fertilizer in Taiwan, 1950-1966.

Under a government-peasant fertilizer-rice barter system in Taiwan, the use of chemical fertilizer is heavily taxed through a high fertilizer-rice exchange ratio. Important economic gains can be realized if the government lowers the tax on fertilizer input and raises, if necessary, the tax on rice output instead. [ABSTRACT FROM AUTHOR]