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Trade liberalization and forest transition
Author(s) -
GonzálezVal Rafael,
Pueyo Fernando
Publication year - 2017
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/ijet.12129
Subject(s) - economics , natural resource economics , stock (firearms) , offset (computer science) , natural resource , liberalization , free trade , resource (disambiguation) , general equilibrium theory , international economics , microeconomics , ecology , geography , market economy , computer network , archaeology , computer science , biology , programming language
We develop a theoretical model that provides an additional explanation for the forest transition based on a trade liberalization scenario. We introduce a renewable natural resource (wood), used as an input by manufacturing firms, in a framework with economic geography foundations: transport costs affect the spatial distribution of firms. In a general equilibrium, the results reproduce the forest transition at a global scale: a decrease in transport costs has an initial negative effect on the worldwide stock of the natural resource, but this effect is offset over time as a consequence of industrial reallocation and eventually disappears in the long run.