Trade and Security, I: Anarchy

James Anderson and S.J. Douglas Marcouiller
Additional contact information
S.J. Douglas Marcouiller: Boston College

No 477, Working Paper Series from Research Institute of Industrial Economics

Abstract: Market exchange is subject to an endogenously-determined level of predation which impedes specialization and gains from trade. Utility-maximizing agents opt between careers in specialized production and careers in predation. Three types of equilibria may emerge, autarky (with no predation and no defense), an insecure exchange equilibrium (with predation and defense), or a secure exchange equilibrium (in which defense completely deters predation). We analyze the influence of key parameters on the type of equilibrium which emerges. We also analyze changes in the welfare of groups of agents (the predators and specialized producers in both the richer region and the poorer region) as exogenous shocks occur in the technology of security. Since changes in security have terms of trade effects, some producers may be hurt by enhanced security. We show cases of 'immiserizing security' in which large poor countries are harmed by increased security.

Keywords: Trade; Economic Equilibrium (search for similar items in EconPapers)
JEL-codes: D58 F10 (search for similar items in EconPapers)
Pages: 36 pages
Date: 1997-05
References: Add references at CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
https://www.ifn.se/wfiles/wp/wp477.pdf (application/pdf)

Related works:
Working Paper: Trade and Security,I: Anarchy (1997)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0477

Access Statistics for this paper

More papers in Working Paper Series from Research Institute of Industrial Economics Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Elisabeth Gustafsson (elisabeth.gustafsson@ifn.se).