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International Trade and Management of Shared Renewable Resource

Author

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  • Yasuhiro Takarada

    ()

  • Takeshi Ogawa
  • Weijia Dong

Abstract

This paper examines the effects of international trade and resource management in a two-country model where each country controls domestic harvest to prevent over-exploitation of an internationally shared renewable resource (e.g., fishery resources). We show that contrary to conventional wisdom, an opening up of trade is likely to raise the steady state utility of a resource-good exporting country, even if it implements weak resource management standards, because the expansion of the resource sector which enjoys economic rent increases its total income. To maximize world welfare in a trading steady state, a resource-good importing country should implement stricter resource management after trade than under autarky but it will implement weak resource management to enjoy economic rent by mitigating the contraction of the resource sector (i.e., rent shifting). Thus, a resource-good exporting country should give some side payments to give a resource-good importing country an incentive to implement strict resource management standards. Keywords: Gains from trade; Shared renewable resource; Resource management JEL Classification: F11; Q27

Suggested Citation

  • Yasuhiro Takarada & Takeshi Ogawa & Weijia Dong, 2012. "International Trade and Management of Shared Renewable Resource," ERSA conference papers ersa12p72, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa12p72
    as

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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa12/e120821aFinal00074.pdf
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    References listed on IDEAS

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    1. 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.
    2. Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-874, September.
    3. Naoto Jinji, 2007. "International trade and renewable resources under asymmetries of resource abundance and resource management," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(4), pages 621-642, August.
    4. Brian R. Copeland & M. Scott Taylor, 2009. "Trade, Tragedy, and the Commons," American Economic Review, American Economic Association, vol. 99(3), pages 725-749, June.
    5. Ali Emami & Richard S. Johnston, 2000. "Unilateral Resource Management in a Two-Country General Equilibrium Model of Trade in a Renewable Fishery Resource," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 161-172.
    6. Erwin Bulte & Richard Damania, 2005. "A note on trade liberalization and common pool resources," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 883-899, August.
    7. Brander, James A. & Scott Taylor, M., 1997. "International trade between consumer and conservationist countries," Resource and Energy Economics, Elsevier, vol. 19(4), pages 267-297, November.
    8. Hotte, Louis & Long, Ngo Van & Tian, Huilan, 2000. "International trade with endogenous enforcement of property rights," Journal of Development Economics, Elsevier, vol. 62(1), pages 25-54, June.
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    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade

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