Geopolitics and International Trade Infrastructure

Sebastian Galiani, José Manuel Paz y Miño and Gustavo Torrens

No 29026, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a simple (incumbent versus entrant) strategic deterrence model to study the economic and geopolitical interactions underlying international trade-related infrastructure projects such as the Panama Canal. We study the incentives for global geopolitical players to support allied satellite countries where these projects are or could potentially be built. We show that even if no effective competitor emerges, the appearance of a geopolitical challenger capable of credibly supporting the entrant has a pro-competition economic effect which benefits consumers all over the world.

JEL-codes: H0 L1 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-int, nep-isf and nep-ppm
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