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Open-Access Renewable Resources: Trade and Trade Policy in a two-country model
Journal of International Economics (1998)
  • M. Scott Taylor, University of Calgary
  • James A. Brander

We develop a theory of resource management where the degree to which countries escape the tragedy of the commons is endogenously determined and explicitly linked to changes in world prices and other possible effects of market integration. We show how changes in world prices can move some countries from de facto open access situations to ones where management replicates that of an unconstrained social planner. Not all countries can follow this path of institutional reform and we identify key country characteristics (mortality rates, resource growth rates, technology) that divide world's set of resource rich countries into three categories. Category I countries will never be able to effectively manage their renewable resources. Category II countries exhibit de facto open access for low resource prices but can mantain a limited form of resource management at higher prices. Category III countries can implement fully efficient management and obtain the unconstrained first best outcome for some range of resource prices. For category III countries de facto open access and the limited management are but transitory phases they pass through.

  • International trade policy,
  • Renewable resources
Publication Date
April, 1998
Citation Information
M. Scott Taylor and James A. Brander. "Open-Access Renewable Resources: Trade and Trade Policy in a two-country model" Journal of International Economics Vol. 44 (1998)
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