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Common Ground between Free-Traders and Environmentalists

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Listed:
  • Karp, Larry
  • Sacheti, Sandeep
  • Zhao, Jinhua

Abstract

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.

Suggested Citation

  • Karp, Larry & Sacheti, Sandeep & Zhao, Jinhua, 2001. "Common Ground between Free-Traders and Environmentalists," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(3), pages 617-647, August.
    • Handle: RePEc:ier:iecrev:v:42:y:2001:i:3:p:617-47
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    References listed on IDEAS

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    1. Chichilnisky, Graciela, 1993. "North-South trade and the dynamics of renewable resources," Structural Change and Economic Dynamics, Elsevier, vol. 4(2), pages 219-248, December.
    2. Anderson, Kym, 1993. "Economic Growth, Environmental Issues and Trade," CEPR Discussion Papers 830, C.E.P.R. Discussion Papers.
    3. David M. G. Newbery & Joseph E. Stiglitz, 1984. "Pareto Inferior Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(1), pages 1-12.
    4. Low, P., 1992. "International Trade and the Environment," World Bank - Discussion Papers 159, World Bank.
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    More about this item

    JEL classification:

    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • F1 - International Economics - - Trade
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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