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Common Ground Between Free-Traders and Environmentalists†

  1. Larry Karp1,‡,
  2. Sandeep Sacheti1,‡,
  3. Jinhua Zhao2,‡

Article first published online: 23 DEC 2001

DOI: 10.1111/1468-2354.00127

Issue

International Economic Review

International Economic Review

Volume 42, Issue 3, pages 617–648, August 2001

Additional Information

How to Cite

Karp, L., Sacheti, S. and Zhao, J. (2001), Common Ground Between Free-Traders and Environmentalists. International Economic Review, 42: 617–648. doi: 10.1111/1468-2354.00127

Author Information

  1. 1

    University of California at Berkeley, American Express, and Iowa State University, U.S.A.,

  2. 2

    University of California at Berkeley, American Express, and Iowa State University, U.S.A. jzhao@iastate.edu

* Jinhua ZhaoDepartment of Economics, Heady Hall, Iowa State University, Ames, IA 50011. Phone: 515-294-5857. Fax: 515-294-0221. E-mail: jzhao@iastate.edu

Publication History

  1. Issue published online: 23 DEC 2001
  2. Article first published online: 23 DEC 2001

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We use a North–South model with property right differences and resource dynamics to study the effects of trade on resource use and welfare. Autarky is likely to Pareto-dominate free trade in the long run when the environment is quite fragile, and the result is reversed when the environment is quite resilient. Trade may cause an environmentally poor country to “drag down” its richer trading partner, when they degrade their stocks which would be preserved under autarky. It may enable the environmentally richer country to “pull up” its partner, when they preserve their stocks which would be degraded under autarky.

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