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IN A RECENT article, Tyers and Falvey (1988) analysed the domestic welfare impacts of exogenous border price changes in the presence of export subsidies. Ordinarily it is assumed that an exporter will gain from an increase in the export price. However, Tyers and Falvey showed that this need not be true if the country would not be an exporter except for its own distortionary policies. This simple, powerful, and somewhat surprising result was obtained under an assumption of perfect price transmission. Using a linear model of excess supply/excess demand they showed that the national welfare impact of an increase in the export price was unaffected by the presence of a per unit export subsidy. As a consequence, an exporter that would be an importer in the absence of its export subsidies will lose from a rise in the border price (ie the loss sustained by an importer when the world price rises is unaffected by its …