A. Emami et Rs. Johnston, Unilateral resource management in a two-country general equilibrium model of trade in a renewable fishery resource, AM J AGR EC, 82(1), 2000, pp. 161-172
We explore the effects of free trade in a renewable natural resource betwee
n two countries in the presence of incomplete property rights. White resour
ce management by one country may benefit one or both trading partners, we d
emonstrate that resource management by only one of the partners may reduce
welfare for both, when compared to the case in which neither manages its re
source sector. These trade-induced losses may be reduced through import tar
iffs and production subsidies on the resource good or by permitting harvest
beyond the rent-maximizing level. Our preliminary work suggests that the W
orld Trade Organization (WTO) and North American Free Trade Agreement (NAFT
A) policy makers should not always insist on free trade and resource manage
ment. Rather, they must pay careful attention to the particular relationshi
ps between trade conditions and natural resource policies among trading nat
ions.