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Bilateral war in a multilateral world: carrots and sticks for conflict resolution

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  • Zsolt Becsi and Sajal Lahiri

Abstract

. This paper constructs a three‐country, specific‐factor, trade‐theoretic model in which two of the countries are in conflict and where war effort is determined endogenously in a Nash equilibrium. The third country does not take part in the war, but trades with the warring countries. In the framework, we examine, inter alia, how war and welfare are affected by globalization and by two instruments available to the third country – one carrot and one stick. Our overall conclusion is that the third parties do have the incentives for, and can play an effective role in, conflict resolution. JEL classification: F02, F11, H56, H77 Ce mémoire présente un modèle théorique de commerce international pour trois pays avec dotation de facteurs spécifique. Deux de ces pays sont en guerre et leur effort de guerre est déterminé de façon endogène dans un équilibre à la Nash. Le troisième pays ne prend pas part à la guerre mais commerce avec les pays en conflit. Dans ce cadre d'analyse, on examine, inter alia, jusqu'à quel point guerre et bien‐être sont affectés par la globalisation et par les deux instruments que le troisième pays a en main – la carotte et le bâton. La conclusion générale est que les tiers pays ont des incitations à jouer (et peuvent jouer) un rôle important dans la résolution de conflits.

Suggested Citation

  • Zsolt Becsi and Sajal Lahiri, 2007. "Bilateral war in a multilateral world: carrots and sticks for conflict resolution," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 40(4), pages 1168-1187, November.
    • Handle: RePEc:wly:canjec:v:40:y:2007:i:4:p:1168-1187
    DOI: 10.1111/j.1365-2966.2007.00447.x
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    Cited by:

    1. Garfinkel, Michelle R. & Skaperdas, Stergios & Syropoulos, Constantinos, 2015. "Trade and insecure resources," Journal of International Economics, Elsevier, vol. 95(1), pages 98-114.
    2. Dushyant Kumar & Prabal Roy Chowdhury, 2015. "Conflict and development," Discussion Papers 15-05, Indian Statistical Institute, Delhi.
    3. Michelle R. Garfinkel & Stergios Skaperdas & Constantinos Syropoulos, 2009. "International Trade and Transnational Insecurity: How Comparative Advantage and Power are Jointly Determined," Working Papers 080921, University of California-Irvine, Department of Economics.
    4. D'Souza, Anna, 2014. "Conflict and Trade: Implications for Agriculture and Food Security," 2014: Food, Resources and Conflict, December 7-9, 2014. San Diego, California 197200, International Agricultural Trade Research Consortium.
    5. Kenneth S. Chan & Jean‐Pierre Laffargue, 2020. "Is piracy sustainable?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(1), pages 321-340, February.
    6. Sajal Lahiri & Valerica Vlad, 2012. "Peace Dividends in a Trade-theoretic Model of Conflict," Economics Bulletin, AccessEcon, vol. 32(1), pages 737-745.
    7. 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.

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    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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