Triple win for trade in renewable resource goods by use of export taxes

Abstract

We challenge the free trade paradigm, in particular for developing countries exporting natural resource goods, by demonstrating positive economic and environmental effects of an export tax for renewable resource goods. The two-sector general equilibrium model designed has an open-access renewable resource industry and a manufacturing industry. The economic, environmental and social effects of using an export tax on goods from the open-access renewable resource industry are analysed. It is demonstrated that the gross domestic product, the steady-state resource stock and the domestic consumption of both products increase with the resource export tax compared to free trade with no trade taxes.