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Renewable Resources, Pollution and Trade in a Small Open Economy

Author

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  • Horatiu A. Rus

    (University of British Columbia)

Abstract

Industrial pollution can have damaging effects on resource-based productive sectors. International trade creates opportunities for overexploitation of the open-access renewable resources but also for separating the sectors spatially. The paper shows that, depending on the relative damage inflicted by the two industries on the environment, it is possible that the production externality will persist and that specialization in the dirty good may not be the obvious choice from a welfare perspective. Also, the resource exporter does not necessarily have to lose from trade even when specializing incompletely, due to the partially offsetting external effects.

Suggested Citation

  • Horatiu A. Rus, 2006. "Renewable Resources, Pollution and Trade in a Small Open Economy," Working Papers 2006.140, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2006.140
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    References listed on IDEAS

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    1. Copeland, Brian R. & Taylor, M. Scott, 1999. "Trade, spatial separation, and the environment," Journal of International Economics, Elsevier, vol. 47(1), pages 137-168, February.
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    4. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
    5. Brander, James A. & Scott Taylor, M., 1998. "Open access renewable resources: Trade and trade policy in a two-country model," Journal of International Economics, Elsevier, vol. 44(2), pages 181-209, April.
    6. Unteroberdoerster, Olaf, 2001. "Trade and Transboundary Pollution: Spatial Separation Reconsidered," Journal of Environmental Economics and Management, Elsevier, vol. 41(3), pages 269-285, May.
    7. James A. Brander & M. Scott Taylor, 1997. "International Trade and Open-Access Renewable Resources: The Small Open Economy Case," Canadian Journal of Economics, Canadian Economics Association, vol. 30(3), pages 526-552, August.
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    9. Baumol, William J & Bradford, David F, 1972. "Detrimental Externalities and Non-Convexity of the Production Set," Economica, London School of Economics and Political Science, vol. 39(154), pages 160-176, May.
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    13. Naoto Jinji, 2006. "International trade and terrestrial open-access renewable resources in a small open economy," Canadian Journal of Economics, Canadian Economics Association, vol. 39(3), pages 790-808, August.
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    Cited by:

    1. Soham Baksi & Michael Benarroch, 2015. "Production Externalities, Environmental Taxes, and the Gains from Trade," Departmental Working Papers 2015-05, The University of Winnipeg, Department of Economics.

    More about this item

    Keywords

    Renewable Resources; Pollution; Production Externalities; Environment; International Trade;

    JEL classification:

    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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