On the Impact of Trade in a Common Property Renewable Resource Oligopoly

H. Benchekroun*, A. Ray Chaudhuri, Dina Tasneem

*Corresponding author for this work

Research output: Working paperDiscussion paperOther research output

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Abstract

We consider a common-pool renewable resource differential game. We show that within this dynamic oligopolistic framework, free trade may lead to a lower discounted sum of consumer surplus and of social welfare than autarky. Trade restrictions may be supported based on both resource conservation and efficiency motives. A priori, this fi…nding is not straightforward; a move from Autarky to Free Trade causes industry output to fi…rst increase and then decrease over time. While producers are shown to be always worse off under free trade than under autarky, consumers are better off in the short run and worse o¤ in the long run. We determine the conditions under which the long-run effects outweigh the short-run effects of trade, leading to a decrease in the discounted sum of not only consumer surplus, but also social welfare.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages29
Volume2019-021
Publication statusPublished - 29 May 2019

Publication series

NameCentER Discussion Paper
Volume2019-021

Fingerprint

Free trade
Common property
Renewable resources
Oligopoly
Social welfare
Consumer surplus
Short-run
Industry
Resource conservation
Common pool
Differential games
Resource efficiency

Keywords

  • renewable resources
  • international trade
  • fisheries
  • common property

Cite this

Benchekroun, H., Ray Chaudhuri, A., & Tasneem, D. (2019). On the Impact of Trade in a Common Property Renewable Resource Oligopoly. (CentER Discussion Paper; Vol. 2019-021). Tilburg: CentER, Center for Economic Research.
Benchekroun, H. ; Ray Chaudhuri, A. ; Tasneem, Dina. / On the Impact of Trade in a Common Property Renewable Resource Oligopoly. Tilburg : CentER, Center for Economic Research, 2019. (CentER Discussion Paper).
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Benchekroun, H, Ray Chaudhuri, A & Tasneem, D 2019 'On the Impact of Trade in a Common Property Renewable Resource Oligopoly' CentER Discussion Paper, vol. 2019-021, CentER, Center for Economic Research, Tilburg.

On the Impact of Trade in a Common Property Renewable Resource Oligopoly. / Benchekroun, H.; Ray Chaudhuri, A.; Tasneem, Dina.

Tilburg : CentER, Center for Economic Research, 2019. (CentER Discussion Paper; Vol. 2019-021).

Research output: Working paperDiscussion paperOther research output

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N2 - We consider a common-pool renewable resource differential game. We show that within this dynamic oligopolistic framework, free trade may lead to a lower discounted sum of consumer surplus and of social welfare than autarky. Trade restrictions may be supported based on both resource conservation and efficiency motives. A priori, this fi…nding is not straightforward; a move from Autarky to Free Trade causes industry output to fi…rst increase and then decrease over time. While producers are shown to be always worse off under free trade than under autarky, consumers are better off in the short run and worse o¤ in the long run. We determine the conditions under which the long-run effects outweigh the short-run effects of trade, leading to a decrease in the discounted sum of not only consumer surplus, but also social welfare.

AB - We consider a common-pool renewable resource differential game. We show that within this dynamic oligopolistic framework, free trade may lead to a lower discounted sum of consumer surplus and of social welfare than autarky. Trade restrictions may be supported based on both resource conservation and efficiency motives. A priori, this fi…nding is not straightforward; a move from Autarky to Free Trade causes industry output to fi…rst increase and then decrease over time. While producers are shown to be always worse off under free trade than under autarky, consumers are better off in the short run and worse o¤ in the long run. We determine the conditions under which the long-run effects outweigh the short-run effects of trade, leading to a decrease in the discounted sum of not only consumer surplus, but also social welfare.

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Benchekroun H, Ray Chaudhuri A, Tasneem D. On the Impact of Trade in a Common Property Renewable Resource Oligopoly. Tilburg: CentER, Center for Economic Research. 2019 May 29. (CentER Discussion Paper).