Vulnerable Trade: The Dark Side of an Edgeworth Box

Charles Anderton and John Carter ()
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John Carter: Department of Economics, College of the Holy Cross

No 411, Working Papers from College of the Holy Cross, Department of Economics

Abstract: We examine incentives to seize and defend goods offered for trade in an Edgeworth box economy. Appropriation possibilities generate an equilibrium of coerced redistribution and voluntary trade in a reduced box. Potential mutual gains remain untaken because the prospect of piracy creates a price wedge, wherein the effective relative price is lowered for the exporter and raised for the importer. As the vulnerability of one or both goods increases, the price wedge widens, causing trade to diminish. If vulnerability becomes sufficiently high, then trade and appropriation are driven to zero, or one or both players are rendered indifferent to trade.

Keywords: appropriation; property rights; piracy; trade; edgeworth box (search for similar items in EconPapers)
JEL-codes: C72 D51 D74 F10 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2004-12
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Journal of Economic Behavior and Organization, November 2008, Vol. 68:2, pp. 422-432.

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https://hcapps.holycross.edu/hcs/RePEc/hcx/HC0411- ... _VulnerableTrade.pdf Original paper written in July 2004 (application/pdf)

Related works:
Journal Article: Vulnerable trade: The dark side of an Edgeworth box (2008)
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