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Trade and Insecure Resources

Author

Listed:
  • Michelle R. Garfinkel

    (Department of Economics, University of California-Irvine)

  • Stergios Skaperdas

    (Department of Economics, University of California-Irvine)

  • Constantinos Syropoulos

    (Department of Economics and International Business, Drexel University)

Abstract
We construct a model of conflict and trade to study the consequences of interstate disputes over contested resources (land, oil, water or other resources) for arming, welfare and trade flows. Different trade regimes imply different costs of such disputes in terms of arming. Depending on world prices, free trade can intensify arming to such an extent that the additional security costs it brings swamp the traditional gains from trade and thus render autarky more desirable for one or all rival states. Free trade, though, is always an equilibrium, and sometimes is a dominant one with features of a prisoner's dilemma outcome. Furthermore, contestation of resources can reverse a country's apparent comparative advantage relative to its comparative advantage in the absence of conflict. And, where such conflict is present, comparisons of autarkic prices to world prices could be inaccurate predictors of trade patterns.

Suggested Citation

  • Michelle R. Garfinkel & Stergios Skaperdas & Constantinos Syropoulos, 2011. "Trade and Insecure Resources," Working Papers 111201, University of California-Irvine, Department of Economics, revised Sep 2013.
    • Handle: RePEc:irv:wpaper:111201
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    References listed on IDEAS

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    Cited by:

    1. Garfinkel, Michelle R. & Syropoulos, Constantinos & Zylkin, Thomas, 2022. "Prudence versus predation and the gains from trade," Journal of Economic Theory, Elsevier, vol. 201(C).
    2. Garfinkel Michelle R. & Syropoulos Constantinos, 2018. "Rules for Dividing a Disputed Resource in the Context of the Classical Liberal Argument for Peace," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 24(1), pages 1-16, February.
    3. Rangan Gupta & Giray Gozgor & Huseyin Kaya & Ender Demir, 2019. "Effects of geopolitical risks on trade flows: evidence from the gravity model," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 9(4), pages 515-530, December.
    4. Safarzynska, Karolina & Sylwestrzak, Marta, 2021. "Resource depletion and conflict: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 902-917.
    5. Martin C. McGuire, 2020. "Trade and the predatory state: Ricardian exchange with armed competition for resources—a diagrammatic exposition," Public Choice, Springer, vol. 182(3), pages 459-494, March.
    6. Garfinkel, Michelle R. & Syropoulos, Constantinos, 2015. "Trade openness and the settlement of domestic disputes in the shadow of the future," Research in Economics, Elsevier, vol. 69(2), pages 191-213.
    7. Yang-Ming Chang & Manaf Sellak, 2019. "A game-theoretic analysis of international trade and political conflict over external territories," Public Choice, Springer, vol. 179(3), pages 209-228, June.
    8. van der Ploeg, Frederick, 2018. "Political economy of dynamic resource wars," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 765-782.
    9. Garfinkel, Michelle R. & Syropoulos, Constantinos & Yotov, Yoto V., 2020. "Arming in the global economy: The importance of trade with enemies and friends," Journal of International Economics, Elsevier, vol. 123(C).
    10. Michelle R. Garfinkel & Constantinos Syropoulos, 2019. "On Trade and the Stability of (Armed) Peace," Working Papers 181910, University of California-Irvine, Department of Economics.
    11. Sadeghi Amroabadi, Behrouz, 2022. "Analyzing the Asymmetric Cumulative Effects of Rentier State on Income Inequality in Mena Countries," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 9(3), pages 113-146, December.
    12. Jaime DE MELO & Marcelo OLARREAGA, 2017. "Trade Related Institutions and Development," Working Papers P199, FERDI.
    13. Skaperdas Stergios, 2020. "The Decline of US Power and the Future of Conflict Management after Covid," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 26(3), pages 1-07, September.
    14. Antoine Pietri, 2017. "Les modèles de « rivalité coercitive » dans l’analyse économique des conflits," Revue d'économie politique, Dalloz, vol. 127(3), pages 307-352.
    15. Vincenzo Bove & Claudio Deiana & Roberto Nistic�, 2018. "Global Arms Trade and Oil Dependence," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 34(2), pages 272-299.
    16. Ivan Lopez Cruz & Gustavo Torrens, 2019. "The paradox of power revisited: internal and external conflict," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 68(2), pages 421-460, September.
    17. Michelle R. Garfinkel & Constantinos Syropoulos, 2015. "Trading with the Enemy," Working Papers 151603, University of California-Irvine, Department of Economics, revised Sep 2017.
    18. Harrison, Mark, 2013. "The Economics of Coercion and Conflict: an Introduction," CAGE Online Working Paper Series 151, Competitive Advantage in the Global Economy (CAGE).
    19. Michelle R. Garfinkel & Stergios Skaperdas & Constantinos Syropoulos, 2010. "Trade in the Shadow of Power," Working Papers 101105, University of California-Irvine, Department of Economics, revised Jan 2011.
    20. Mildenberger, Carl David & Pietri, Antoine, 2018. "How does size matter for military success? Evidence from virtual worlds," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 137-155.
    21. Yang-Ming Chang & Manaf Sellak, 2024. "Conflict and agreement in the collective choice of trade policies: implications for interstate disputes," Public Choice, Springer, vol. 199(1), pages 103-135, April.
    22. Alex Dickson & Ian A MacKenzie & Petros G Sekeris, 2018. "The role of markets and preferences on resource conflicts," Working Papers 1819, University of Strathclyde Business School, Department of Economics.
    23. Hasan, Md Didarul & Lahiri, Sajal, 2015. "A two-period model of natural resources and inter-country conflicts: Effects of trade sanctions," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 5(2), pages 76-100.
    24. Yang‐Ming Chang & Shih‐Jye Wu, 2020. "Insecure Resources, Bilateral Trade, and Endogenous Predation: A Game‐Theoretic Analysis of Conflict and Trade," Southern Economic Journal, John Wiley & Sons, vol. 86(4), pages 1338-1371, April.
    25. Jonathan J Adams, 2017. "The Rise and Fall of Armies," Working Papers 001002, University of Florida, Department of Economics.

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    More about this item

    Keywords

    Trade openness; Property rights; Interstate disputes; Conflict; Security policies;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F2 - International Economics - - International Factor Movements and International Business
    • F10 - International Economics - - Trade - - - General

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