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Trade Policy and Natural Resource Use: The Case for a Quantitative Restriction

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  • Susana Ferreira

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Abstract

This paper presents a simple way for countries to reap the benefits of trade liberalization without exacerbating problems of overexploitation of natural resources. In the context of a Ricardo–Viner dynamic trade model, it is shown that when a binding quantitative restriction regulates extraction of a natural resource, free trade is optimal. This is true even if the quantitative restriction is not optimal. In contrast, in the presence of a suboptimal tax (including a zero tax in the special case of open access) on the use of natural resources, trade liberalization is not necessarily welfare improving. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Susana Ferreira, 2007. "Trade Policy and Natural Resource Use: The Case for a Quantitative Restriction," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(2), pages 361-376, June.
  • Handle: RePEc:kap:enreec:v:37:y:2007:i:2:p:361-376
    DOI: 10.1007/s10640-006-9030-2
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Louis Dupuy & Matthew Agarwala, 2014. "International trade and sustainable development," Chapters,in: Handbook of Sustainable Development, chapter 25, pages 399-417 Edward Elgar Publishing.
    2. Robbert Maseland, 2009. "Trade in a world with recyclable resources," DEGIT Conference Papers c014_008, DEGIT, Dynamics, Economic Growth, and International Trade.
    3. Fenske, James, 2014. "Imachi Nkwu: Trade and the Commons," The Journal of Economic History, Cambridge University Press, vol. 74(01), pages 39-68, March.
    4. Flaaten, Ola & Schulz, Carl Erik, 2010. "Triple win for trade in renewable resource goods by use of export taxes," Ecological Economics, Elsevier, vol. 69(5), pages 1076-1082, March.

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