Open-access resources and international trade

This thesis was concerned with one particular, but important, aspect of the “trade and the environment” debate: the inter-relationship between international trade, trade policy, and renewable open-access resources such as fisheries. In order to develop models for analysis, a standard (Gordon-Schaefer) model of renewable resources is integrated into the general equilibrium Ricardian and Heckscher-Ohlin international trade models. While such stylized models have limitations, they capture the property that the overexploitation of renewable resources lowers productivity of the resource-harvesting industry relative to other industries reducing output despite increased effort.;A key finding of this thesis is that, although free trade and capital mobility is not optimal when resources are open access, this need not imply that restricted trade and capital mobility is better; at times, subsidized trade may be best. Three main cases are considered in the thesis. First, second-best trade policy for a small open economy is considered. It is demonstrated that welfare can be improved by a tariff in the case of a fish exporting country and a trade subsidy in the case of a fish importing country. Second, capital mobility is allowed for and it is shown that a small open economy can unambiguously gain from permitting free capital mobility if it is capital scarce and fishing is labour intensive. The welfare effects of an unfettered capital outflow however, are ambiguous. Lastly, endogenous world prices are considered within the context of a two-country specification. It is shown that when trade occurs between conservationist and open-access economies there is always a trade policy that can improve welfare.