New trade in renewable resources and consumer preferences for diversity

Martin Quaas and Max T. Stöven
Authors registered in the RePEc Author Service: Max T. Stoeven

No 2014-08, Economics Working Papers from Christian-Albrechts-University of Kiel, Department of Economics

Abstract: The literature on trade in renewable resources implicitly assumes that the traded resources are perfect substitutes. We model trade in renewable resources as stipulated not only by autarky price differences, but also by consumers' love of variety. We show that the love-of-variety effect enables welfare gains from trade even if total consumption decreases. Total consumption may decrease because the love of variety weakens the link between resource scarcity and demand. If consumers are willing to pay the rising prices for harvests from increasingly depleted stocks, trade liberalization may end in stock collapse. The love of variety may thus threaten variety.

Keywords: trade; environment; renewable resources; open access; love of variety (search for similar items in EconPapers)
JEL-codes: F18 Q21 Q22 Q23 Q27 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-agr, nep-env and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cauewp:201408

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