Resources for Conflict: Constraint or Wealth?

Kyung Baik, Subhasish Chowdhury and Abhijit Ramalingam

No 61, University of East Anglia Applied and Financial Economics Working Paper Series from School of Economics, University of East Anglia, Norwich, UK.

Abstract: We investigate the effects of the availability of resources that can be expended in conflict on conflict intensity. We run a between-subjects Tullock contest in which we vary the contest budget from Low to Medium to High, while keeping the Nash equilibrium bid the same. We find an `inverted U-shaped' relationship between resource availability and conflict intensity. While standard error correction models can explain the first part of the relationship by attributing resources as constraint, they do not apply in the latter part. We further run a Wealth treatment in which the budget remains Medium, but a fixed payment independent of the contest outcome is provided. The level of conflict in the Wealth and the High treatment are not different, implying a wealth effect through available resources. We conclude that the resources for conflict can have both a constraint as well as a wealth effect. When initial resources are scarce, they act as a constraint. As more resources become available the constraint loosens up and conflict intensity increases. However, when resources are abundant, they are viewed as wealth and conflict intensity decreases. Hence, the availability of additional resources reduces the marginal benefit from winning as well as conflict intensity.

Date: 2014-04
New Economics Papers: this item is included in nep-exp
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Working Paper: Resources for conflict: Constraint or wealth? (2015)
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