INTERNATIONAL-TRADE BETWEEN CONSUMER AND CONSERVATIONIST COUNTRIES

We consider trade between a 'consumer' country with an open access ren ewable resource and a 'conservationist' country that regulates resourc e harvesting to maximize domestic steady-state utility. In what we cal l the mild overuse case, the consumer country exports the resource goo d and suffers steady-state losses from trade, as suggested by the conv entional wisdom that weak resource management standards confer a compe titive advantage on domestic firms in the resource sector but cause we lfare losses. Strikingly, however, when the resource stock is most in jeopardy, the conservationist country exports the resource good in ste ady state and both countries experience gains from trade.