Consi der t he nor t h sout h model wher e t he envi

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Consi dert heNor t h- Sout hmodelwher et heenvi r onmentent er sasani nputofpr oduct i on,E.Envi r onment ali nput swi l lbeshownt ohaveapar t i cul ar l ypr onouncedef f ectont hepat t er nofi nt er nat i onalt r ade.Thi scanbeseenasf ol l ows.Recal lt hatourmodelhaspr i ce- dependentsuppl yf unct i ons f orenvi r onmen-t alr esour ces,gi venbyPE=PE( E) ,wher ePEi st hepr i ceofauni toft heenvi r onment alr esour ceE.Thei mpor t anceoft hi spr i cedependencebecamecl eari nLemmalwher ewepr ovedt hatt hesuppl yf unct i onofanenvi r onment alr esour cedependsont henat ur eoft hepr oper t yr i ght sf ort hatr esour ce.Thi si nt ur nwi l ldet er mi net hepat t er nsoft r ade.Consi dert hecommonpr oper t y r esour ceE.I ft her e ar enor egul at i onscon-cer ni ngt heuse oft her esour ceand noenf or ceabl epr i vat epr oper t yr i ght si nt hi sr esour ce,t hent hecostt oani ndi vi dualofext r act i nganaddi t i onaluni tofEasani nputofpr oduct i onwi l lber el at i vel yl ow.Thi swi l lmer el yr ef l ectt he pr i vat ecost ssuchase. g.i nt hecaseofaf i sher y,t he pr i vat ecost sofcat chi ng,andi nt hecaseof anaqui f er ,t hepr i vat ecost sofobt ai ni ngt hewat er.Theywi l lnot
3 6GRACI ELACHI CHI LNI SKYr ef l ectt hef ul li mpactonsoci et yoft heuseoft her esour ce,whi ch: nt hecaseoft hef i sher ycoul devent ual l ybet hedepl et i onoft hest ock.I nt hecaseoft heaqui f ert hi scoul dbedamagef r omover usesuchast hesal i nat i onwhi cht akespl acewhenwat erl evel sf al lbel owcr i t i call evel s( Dasgupt a,1982).I fhoweverext er nal i t i esar ef ul l yi nt er nal i zed( byr egul at i onorbypr oper t yr i ght s)sot hatt hecostt oani ndi vi dualofusi ngt her esour cer ef l ect sf ul l yt hesoci alcost sofi t suse,t hent hepr i vat ecost swi l lbehi gherandcoul di ncr easer api dl ywi t ht hel evelof use ( Dasgupt a andHeal ,1979,Chapt er3).Di f f er encesi nt hest r uct ur eofpr oper t yr i ght si nt heext r act i onoft her esour cet hati susedasani nputofpr oduct i onwi l lt her ef or eber ef l ect edi ndi f f er encesi nt hesuppl ycondi t i onsoft hatr esour ce.I n i ndust r i aldemocr aci espr oper t yr i ght sar e bet t erest abl i shedandmor ewi del yenf or ceabl et hani ndevel opi ngcount r i es,andr egul at or ypol i ci esdesi gnedt oi nt er nal i zecost sofusi nganenvi r onment alr esour ce( suchaspol l ut i ng cl eanai rwi t haut omobi l eexhaustf umes,orbur ni ngcoalf orheat i ngpur poses)ar emor ewi despr eadandwi del yenf or ced.Thi si sduei n par tt ot hel ar ge cost sassoci at edwi t hal egali nf r ast r uct ur eand a syst emofenf or cementandcont r ol:suchcost sar er el at i vel ymor eaccessi bl et or i ch

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