Empire-Building and Price Competition

Antoine Pietri (), Tarik Tazdait and Mehrdad Vahabi
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Tarik Tazdait: CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique

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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)
Date: 2013-01-09
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Published in Workshop on Contests: Experiments and Theory, Max Planck Institute for Tax Law and Public Finance, Jan 2013, Munich, Germany. http://mpra.ub.uni-muenchen.de/id/eprint/44368

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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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