We consider a common-pool renewable resource di¤erential 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 e¢ ciency motives. A priori, this …nding is not straightforward; a move from Autarky to Free Trade causes industry output to …rst increase and then decrease over time. While producers are shown to be always worse o¤ under free trade than under autarky, consumers are better o¤ in the short run and worse o¤ in the long run. We determine the conditions under which the long-run e¤ects outweigh the short-run e¤ects of trade, leading to a decrease in the discounted sum of not only consumer surplus, but also social welfare. We are grateful to Mr. Ying Tung Chan and Mr. William Duan for helpful research assistance. We thank the Canadian Social Sciences and Humanities Research Council (SSHRC) for …nancial support. Hassan Benchekroun also thanks the Fonds de recherche du Québec-Société et culture (FRQSC) for …nancial support.
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