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Open Access Renewable Resources: Trade and Trade Policy in a Two-CountryModel

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  • James A. Brander
  • M. Scott Taylor

Abstract

This paper develops a two-good, two-country model with national open access renewable resources. We derive an appropriate analog of `factor proportions' for the renewable resource case and link it to trade patterns and to the likelihood of diversified production. The resource importer gains from trade. However, a diversified resource exporting country necessarily suffers a decline in steady state utility resulting from trade, and may lose along the entire transition path. Thus the basic `gains from trade' presumption is substantially undermined by open access resources. Tariffs imposed by the resource importing country always benefit the resource exporter, and may be pareto-improving.

Suggested Citation

  • James A. Brander & M. Scott Taylor, 1996. "Open Access Renewable Resources: Trade and Trade Policy in a Two-CountryModel," NBER Working Papers 5474, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5474
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    JEL classification:

    • F1 - International Economics - - Trade
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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