Trade Interdependence, Arming and the Choice between War and Peace

Michelle Garfinkel and Constantinos Syropoulos ()
Additional contact information
Constantinos Syropoulos: School of Economics, Drexel University

No 202511, Working Papers from Center for Global Policy Analysis, LeBow College of Business, Drexel University

Abstract: We consider a dynamic setting where two countries with competing claims to a resource/asset first arm and then choose whether to resolve their dispute through war or peacefully through settlement. War precludes international trade and can be destructive, but also locks gains and eliminates arming costs in the future. By contrast, a peaceful resolution, possibly supported by arming, avoids destruction and allows for mutually advantageous trade; yet future settlements must be renegotiated under the threat of war. We characterize the conditions under which peace is stable and show that, depending on war’s destructiveness, time preferences, and the distribution of resource endowments, greater gains from trade can pacify international tensions, but possibly only for more uneven endowment distributions.

Keywords: Interstate war; Armed peace; Unarmed peace; Security policies; Gains from trade; Shadow of the future (search for similar items in EconPapers)
JEL-codes: C72 C78 D30 D70 D74 F10 F51 F60 (search for similar items in EconPapers)
Pages: 73
Date: 2025-11
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.lebow.drexel.edu/sites/default/files/2 ... -interdependence.pdf First version, 2025 (application/pdf)

Related works:
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:drx:wpaper:202511

Access Statistics for this paper

More papers in Working Papers from Center for Global Policy Analysis, LeBow College of Business, Drexel University Contact information at EDIRC.
Bibliographic data for series maintained by Yoto V. Yotov ().