Numerous developing economies depend vitally on renewable natural-resource (NR)-based commodities. This study develops a general equilibrium model to examine the steady-state impact of changes in a small economy's NR congestion under open access and optimal regulation. This issue has often been examined under 'low' congestion (LC) – with MC > AC and both upward sloping. Two more categories, 'high' (HC) and 'super' (SC) congestion – whose AC is backwardbending and MC < 0 – are identified, with regulation's impact under SC opposite to that under HC [e.g., a tax reduces (raises) price and raises (reduces) output under SC (HC)].
Findings include: i) Welfare and NR losses under open access are typically a multiple to one order (one to two orders) of magnitude greater for HC (SC) than for LC countries, with congestion determined by population (world price) level under autarky (trade); ii) Trade openness (and termsof- trade improvements) reduces an exporter's welfare and NR, and reduce both sectors' output under HC and SC, though it may prevent population growth to cause NR and society's collapse; iv) Welfare and NR open-access costs increase (decline) with population under autarky (trade); v) Though trading partners' shift from open access to optimal regulation is said to create a 'NR destruction haven' effect and reduce exporters' NR, the opposite is likely under SC; vi) Results are robust to various alternative functional forms and parameter values (e.g., low vs. middle-income countries' food expenditure shares). Policy implications are provided.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.