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

  • James A. Brander
  • M. Scott Taylor

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.

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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 30 (1997)
Issue (Month): 3 (August)
Pages: 526-52

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Handle: RePEc:cje:issued:v:30:y:1997:i:3:p:526-52
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  1. Munro, Gordon R. & Scott, Anthony D., 1985. "The economics of fisheries management," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 2, chapter 14, pages 623-676 Elsevier.
  2. Mason, Charles F & Polasky, Stephen, 1994. "Entry Deterrence in the Commons," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(2), pages 507-25, May.
  3. John Hartwick, 1976. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," Working Papers 220, Queen's University, Department of Economics.
  4. Loayza, E.A. & Sprague, L.M., 1992. "A STrategy for Fisheries Development," World Bank - Discussion Papers 135, World Bank.
  5. Tawada, Makoto, 1982. "A Note on International Trade with a Renewable Resource," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(1), pages 157-63, February.
  6. repec:cup:cbooks:9780521297615 is not listed on IDEAS
  7. Copes, Parzival, 1970. "The Backward-Bending Supply Curve Of The Fishing Industry," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(1), pages 69-77, February.
  8. Chichilnisky, G., 1991. "Global Environment and North-South Trade," Discussion Papers 1991_45, Columbia University, Department of Economics.
  9. James R. Markusen, 1976. "Production and Trade from International Common Property Resources," Canadian Journal of Economics, Canadian Economics Association, vol. 9(2), pages 309-19, May.
  10. Kemp, Murray C. & Van Long, Ngo, 1984. "The role of natural resources in trade models," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 8, pages 367-417 Elsevier.
  11. McRae, James J., 1978. "Optimal and competitive use of replenishable natural resources by open economies," Journal of International Economics, Elsevier, vol. 8(1), pages 29-54, February.
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