Common ground between free-traders and environmentalists
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.
(This abstract was borrowed from another version of this item.)
|Date of creation:||26 Aug 1999|
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