Open Access Renewable Resources: Trade and Trade Policy in a Two-Countrymodel

33 Pages Posted: 28 Jun 1998 Last revised: 18 Dec 2022

See all articles by James A. Brander

James A. Brander

University of British Columbia (UBC) - Sauder School of Business

M. Scott Taylor

University of Calgary - Department of Economics

Date Written: March 1996

Abstract

This paper develops a two-good, two-country model with national open access renewable resources. We derive an appropriate analog of `factor proportions' for the renewable resource case and link it to trade patterns and to the likelihood of diversified production. The resource importer gains from trade. However, a diversified resource exporting country necessarily suffers a decline in steady state utility resulting from trade, and may lose along the entire transition path. Thus the basic `gains from trade' presumption is substantially undermined by open access resources. Tariffs imposed by the resource importing country always benefit the resource exporter, and may be pareto-improving.

Suggested Citation

Brander, James A. and Taylor, Michael Scott, Open Access Renewable Resources: Trade and Trade Policy in a Two-Countrymodel (March 1996). NBER Working Paper No. w5474, Available at SSRN: https://ssrn.com/abstract=4153

James A. Brander

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8483 (Phone)
604-822-8477 (Fax)

Michael Scott Taylor (Contact Author)

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

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