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New trade in renewable resources and consumer preferences for diversity

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  • Quaas, Martin F.
  • Stöven, Max T.

Abstract

The literature on trade in renewable resources implicitly assumes that the traded resources are perfect substitutes. We model trade in renewable resources as stipulated not only by autarky price differences, but also by consumers' love of variety. We show that the love-of-variety effect enables welfare gains from trade even if total consumption decreases. Total consumption may decrease because the love of variety weakens the link between resource scarcity and demand. If consumers are willing to pay the rising prices for harvests from increasingly depleted stocks, trade liberalization may end in stock collapse. The love of variety may thus threaten variety.

Suggested Citation

  • Quaas, Martin F. & Stöven, Max T., 2014. "New trade in renewable resources and consumer preferences for diversity," Economics Working Papers 2014-08, Christian-Albrechts-University of Kiel, Department of Economics.
  • Handle: RePEc:zbw:cauewp:201408
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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. Erwin Bulte & Edward Barbier, 2005. "Trade and Renewable Resources in a Second Best World: An Overview," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(4), pages 423-463, April.
    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. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    6. Rögnvaldur Hannesson, 2000. "Renewable resources and the gains from trade," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 122-132, February.
    7. 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.
    8. 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.
    9. Martin F. Quaas & Till Requate, 2013. "Sushi or Fish Fingers? Seafood Diversity, Collapsing Fish Stocks, and Multispecies Fishery Management," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(2), pages 381-422, April.
    10. 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.
    11. Carolyn Fischer, 2010. "Does Trade Help or Hinder the Conservation of Natural Resources?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(1), pages 103-121, Winter.
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    More about this item

    Keywords

    trade; environment; renewable resources; open access; love of variety;

    JEL classification:

    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade
    • F18 - International Economics - - Trade - - - Trade and Environment

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