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On the Impact of Trade in a Common Property Renewable Resource Oligopoly

Author

Listed:
  • Hassan Benchekroun
  • Amrita Ray Chaudhuri
  • Dina Tasneem

Abstract

We consider a common-pool renewable resource differential game. We show that within this dynamic oligopolistic framework, free trade may lead to a lower discounted sum of consumer surplus and of social welfare than autarky. Trade restrictions may be supported based on both resource conservation and effciency motives. A priori, this fi nding is not straightforward; a move from Autarky to Free Trade causes industry output to first increase and then decrease over time. While producers are shown to be always worse off under free trade than under autarky, consumers are better off in the short run and worse off in the long run. We determine the conditions under which the long-run effects outweigh the short-run effects of trade, leading to a decrease in the discounted sum of not only consumer surplus, but also social welfare.

Suggested Citation

  • Hassan Benchekroun & Amrita Ray Chaudhuri & Dina Tasneem, 2019. "On the Impact of Trade in a Common Property Renewable Resource Oligopoly," Departmental Working Papers 2019-01, The University of Winnipeg, Department of Economics.
  • Handle: RePEc:win:winwop:2019-01
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    File URL: http://economics.uwinnipeg.ca/RePEc/winwop/2019-01.pdf
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    References listed on IDEAS

    as
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    6. Benchekroun, Hassan & Gaudet, Gérard, 2015. "On the effects of mergers on equilibrium outcomes in a common property renewable asset oligopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 209-223.
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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade

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