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)
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We argue that the costs of domestic and transnational insecurity are large and economically significant and that they may vary with the trade regime of a country. Then, in evaluating trade regimes, the gains from trade need to be weighed against the change in the security costs they induce. Within a simple model of trade, small countries that import a contested resource unambiguously gain from free trade. However, exporters of a contested resource incur additional security costs that are higher than the gains from trade compared to autarky, as long as the international price of the contested resource is not too high. We conclude with a discussion of how domestic and transnational governance could reduce insecurity.
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Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number
080901.
Find related papers by JEL classification: D30 - Microeconomics - - Distribution - - - General D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances F2 - International Economics - - International Factor Movements and International Business F10 - International Economics - - Trade - - - General
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Michelle R. Garfinkel & Stergios Skaperdas & Constantinos Syropoulos, 2006.
"Globalization and Domestic Conflict,"
Working Papers
050601, University of California-Irvine, Department of Economics.
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