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Common ground between free-traders and environmentalists

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  • 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.
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Suggested Citation

  • Karp, Larry & Sacheti, Sandeep & Zhao, Jinhua, 1999. "Common ground between free-traders and environmentalists," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7jw3t8pw, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt7jw3t8pw
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    References listed on IDEAS

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    1. 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.
    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. 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.
    5. Low, P., 1992. "International Trade and the Environment," World Bank - Discussion Papers 159, World Bank.
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    More about this item

    Keywords

    trade; free-trade; environment;
    All these keywords.

    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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