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International Trade and Open Access Renewable Resources: The Small Open Economy Case

James Brander and M. Scott Taylor

No 5021, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a two-sector general equilibrium model of an economy with an open access renewable resource. We characterize the autarkic steady state, showing that autarky prices (and 'comparative advantage') are determined by the ratio of intrinsic resource growth to labor. Under free trade, steady state trade and production patterns for a small open economy are determined by whether the resource good's world price exceeds its autarky price. Strikingly, if the small country exports the resource good while remaining diversified, then steady-state utility is lower than in autarky, and increases in the world price of exports are welfare-reducing.

JEL-codes: F10 Q20 (search for similar items in EconPapers)
Date: 1995-02
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as Canadian Journal of Economics, Vol. 30, no. 3 (August 1997): 526-552.

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