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Common Ground between Free-Traders and Environmentalists

Author

Listed:
  • Karp, Larry
  • Sacheti, Sandeep
  • Zhao, Jinhua

Abstract

We use a North-South model with property right differences and resource dynamics to study the effects of trade on resource use and welfare. Autarky is likely to Pareto-dominate free trade in the long run when the environment is quite fragile, and the result is reversed when the environment is quite resilient. Trade may cause an environmentally poor country to "drag down" its richer trading partner, when they degrade their stocks which would be preserved under autarky. It may enable the environmentally richer country to "pull up" its partner, when they preserve their stocks which would be degraded under autarky.

Suggested Citation

  • Karp, Larry & Sacheti, Sandeep & Zhao, Jinhua, 2001. "Common Ground between Free-Traders and Environmentalists," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(3), pages 617-647, August.
  • Handle: RePEc:ier:iecrev:v:42:y:2001:i:3:p:617-47
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    Citations

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    Cited by:

    1. Karp, Larry, 2005. "Property rights, mobile capital, and comparative advantage," Journal of Development Economics, Elsevier, vol. 77(2), pages 367-387, August.
    2. Gulati, Sumeet, 2001. "The Effects of Choosing Free Trade on Endogenous Environmental Regulation and Welfare: A Model of Common Agency Government," 2001 Annual meeting, August 5-8, Chicago, IL 20449, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Eggert, Håkan & Greaker, Mads, 2009. "Effects of Global Fisheries on Developing Countries: Possibilities for Income and Threat of Depletion," Discussion Papers dp-10-09-02-efd, Resources For the Future.
    4. Michele Ruta & Anthony J. Venables, 2012. "International Trade in Natural Resources: Practice and Policy," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 331-352, August.
    5. Akihiko Yanase, 2010. "Trade, Strategic Environmental Policy, and Global Pollution," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 493-512, August.
    6. Gallegos, Alberto & Régibeau, Pierre, 2004. "Managed Trade, Trade liberalisation and Local Pollution," Economics Discussion Papers 8877, University of Essex, Department of Economics.
    7. Karp, Larry & Zhao, Jinhua & Sacheti, Sandeep, 2003. "The long-run effects of environmental reform in open economies," Journal of Environmental Economics and Management, Elsevier, vol. 45(2), pages 246-264, March.
    8. Barbier, Edward B. & Bulte, Erwin H., 2004. "Introduction to the symposium on trade, renewable resources and biodiversity," Journal of Environmental Economics and Management, Elsevier, vol. 48(2), pages 883-890, September.
    9. Horatiu A. Rus, 2016. "Renewable Resources, Pollution and Trade," Review of International Economics, Wiley Blackwell, vol. 24(2), pages 364-391, May.
    10. Anriquez, Gustavo, 2002. "Trade And The Environment: An Economic Literature Survey," Working Papers 28598, University of Maryland, Department of Agricultural and Resource Economics.
    11. Richter, Andries & van Soest, Daan & Grasman, Johan, 2013. "Contagious cooperation, temptation, and ecosystem collapse," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 141-158.
    12. Zaman, Rubaiya, 2012. "CO2 Emissions, Trade Openness and GDP Percapita : Bangladesh Perspective," MPRA Paper 48515, University Library of Munich, Germany.
    13. Akihiho Yanase, 2013. "Free trade may save a renewable resource from exhaustion," Economics Bulletin, AccessEcon, vol. 33(1), pages 226-233.
    14. Muthukumara Mani & Per G. Fredriksson, 2002. "The Rule of Law and the Pattern of Environment Protection," IMF Working Papers 02/49, International Monetary Fund.
    15. Cremer, Helmuth & Gahvari, Firouz, 2006. "Which border taxes? Origin and destination regimes with fiscal competition in output and emission taxes," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 2121-2142, November.
    16. Harvey E. Lapan & Shiva Sikdar, 2017. "Can Trade Be Good for the Environment?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(2), pages 267-288, April.

    More about this item

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • F1 - International Economics - - Trade
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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