Export liberalization and household welfare: the case of rice in Vietnam

Vietnam has rapidly become one of the three largest rice exporters in the world, in spite of a binding export quota. This article uses a multimarket spatial‐equilibrium model to examine the effect of further liberalization on regional rice prices. Household data are then used to calculate the welfare impact of these price changes on different household groups. The results suggest that although rice export liberalization would raise food prices and exacerbate regional inequality, it would also increase average real income and reduce (slightly) the incidence and severity of poverty. We explore several explanations of these apparently paradoxical results.