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International Trade and Open-Access Renewable Resources: The Small Open Economy Case

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  • James A. Brander
  • M. Scott Taylor

Abstract

The authors examine a small open economy with an open-access renewable resource. Using a two-sector general equilibrium model, they characterize the autarkic steady state and then show that trade reduces steady-state utility for a diversified resource exporter. Instantaneous gains occur as trade opens but they are eroded by ongoing resource depletion. The present value of utility falls for appropriate discount rates and terms-of-trade 'improvements' may be welfare reducing. The authors also show that autarky prices, the pattern of trade, and the structure of production all are linked to a simple ratio of the intrinsic resource growth rate to labor supply.

Suggested Citation

  • James A. Brander & M. Scott Taylor, 1997. "International Trade and Open-Access Renewable Resources: The Small Open Economy Case," Canadian Journal of Economics, Canadian Economics Association, vol. 30(3), pages 526-552, August.
    • Handle: RePEc:cje:issued:v:30:y:1997:i:3:p:526-52
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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