Empire-building and price competition

Antoine Pietri, Tarik Tazdaït and Mehrdad Vahabi

MPRA Paper from University Library of Munich, Germany

Abstract: While economic historians have stressed the importance of price competition in the protection market, theorists of conflictual activity have argued against the extrapolation of this form of competition in the protection market and favored competition through the quantity of conflictual effort. We purport to show the relevance of price competition in the protection market by focusing on the competition between empires. By distinguishing absolute and differential protection rents, we first define coercive rivalry and price competition among empires and then establish three types of empires, namely early empires of domination, territorial empires and merchant empires. Empires are structured on the basis of two types of hierarchies: “top-down” and “bottom-up” that determine their protection costs. We systematically study the impact of asymmetrical protection costs on price competition in the light of Bertrand equilibria. We provide an economic rationale for the use of violence throughout history in conformity with the findings of economic historians.

Keywords: Absolute and differential protection rents; Bertrand equilibrium; Empires of domination; Merchant empires; Territorial Empires (search for similar items in EconPapers)
JEL-codes: D74 H11 H56 L13 P16 (search for similar items in EconPapers)
Date: 2013-02-14
New Economics Papers: this item is included in nep-com and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Empire-building and Price Competition (2014)
Working Paper: Empire-Building and Price Competition (2013)
Working Paper: Empire Building and Price Competition (2013)
Working Paper: Empire-building and Price competition (2013)
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