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Trade and Resource Sustainability with Asset Markets

Author

Listed:
  • Larry Karp

    (University of California, Berkeley)

  • Armon Rezai

    (Vienna University of Economics and Business
    IIASA)

Abstract

Trade changes incentives to protect an open-access natural resource independently of its effect on the resource price. General equilibrium linkages cause resource policy to affect the price of privately owned assets regardless of whether they are used in the resource sector. In the closed economy, the asset market in our overlapping generations setting creates incentives for currently living agents to protect the natural resource. The interplay of the asset market and general equilibrium effects causes trade to reverse these incentives. Trade liberalization and the establishment of formal property rights are policy complements: the former makes the latter more important.

Suggested Citation

  • Larry Karp & Armon Rezai, 2022. "Trade and Resource Sustainability with Asset Markets," Dynamic Games and Applications, Springer, vol. 12(3), pages 929-953, September.
    • Handle: RePEc:spr:dyngam:v:12:y:2022:i:3:d:10.1007_s13235-021-00400-4
    DOI: 10.1007/s13235-021-00400-4
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    References listed on IDEAS

    as
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