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Trade and insecure resources
Journal article   Open access   Peer reviewed

Trade and insecure resources

Michelle R. Garfinkel, Stergios Skaperdas and Constantinos Syropoulos
Journal of international economics, v 95(1), pp 98-114
01 Jan 2015
DOI: https://doi.org/10.1016/j.jinteco.2014.10.001
Featured in Collection :   UN Sustainable Development Goals @ Drexel
url
https://www.economics.uci.edu/files/docs/workingpapers/2011-2012/garfinkel-01.pdfView
SubmittedOpen Access (License Unspecified),  Open

Abstract

Business & Economics Economics Social Sciences
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. (C) 2014 Elsevier B.V. All rights reserved.

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32 citations in Web of Science
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Domestic collaboration
Web of Science research areas
Economics
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