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Shared Renewable Resources: Gains from Trade and Trade Policy
Author(s) -
Takarada Yasuhiro,
Dong Weijia,
Ogawa Takeshi
Publication year - 2013
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12089
Subject(s) - economics , stock (firearms) , comparative advantage , commercial policy , trade barrier , international economics , resource (disambiguation) , production (economics) , international trade , gains from trade , microeconomics , mechanical engineering , computer network , computer science , engineering
Abstract This paper examines the effects of international trade and trade policy in a two‐country, two‐good model with an open‐access renewable resource that is internationally shared. We show that both countries may still benefit from trade when they specialize in the production of their comparative advantage good, although the shared resource is reduced by trade. In addition, we demonstrate that the steady state utility of a resource‐good importing country may be reduced by trade, even if it specializes in the production of a non‐resource good. Import tariffs and export taxes on a resource good may increase or decrease the shared stock level depending on the production patterns in a trading steady state. The trade policy is likely to be P areto‐improving when the shared stock rises, while both countries may be made worse off by the trade policy when the shared stock falls.