Is Free Trade Good for Renewable Resources: Brander & Taylor Redux

M. Scott Taylor

No 33113, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper generalizes the original Brander and Taylor model of open-access renewable resource use and trade to address three common critiques. First, I introduce heterogeneity across agents in harvesting productivity to smooth out the model's extreme specialization patterns while maintaining its Ricardian structure and tractability. Second, I move beyond the original assumption of open access by constructing a policy stringency function allowing for partial, first-best, and endogenous resource policy. Third, by exploiting the smooth substitution possibilities generated by agent heterogeneity and the insight that policy stringency functions are likely to vary across countries, I show how the model's core predictions can be evaluated using empirical methods related to those in growth econometrics.

JEL-codes: F11 F18 F64 Q20 Q27 (search for similar items in EconPapers)
Date: 2024-11
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