ABSTRACT
This chapter focuses on how the lack of property rights in North-South trade of primary resources can distort trade and threaten the sustainability of development. For each property rights regime, the production function is redefined to reflect the extent to which the harvester takes into consideration the externalities that its harvesting produces on the other harvesters within that regime. The dynamics of the renewable resource show how the stock depends on property rights. Property rights may change slowly, however, because they require expensive legal infrastructure and enforcement. Poor countries may find themselves unable to accommodate such policies quickly. The lack of property rights characterizes a class of environmental problems arising from the use of renewable resources as inputs in the production of traded goods. In the North, property rights are well defined, while in the South, the environmental resource is unregulated common property.
