Cooperation, Conflict, and the Costs of Anarchy

I consider a model in which two states choose how much to arm and whether to attack in successive periods. Arms are useful not only for deterrence or taking territory, but also because they influence the resolution of a set of disputed issues. States can cooperate on the issues by limiting military competition, but only as far as an endogenous “war constraint†allows. Factors determining the tightness of the war constraint imply hypotheses about the international determinants of military effort and thus the costs of anarchy. The strategic logic differs from standard security-dilemma arguments, in which the costs of anarchy are associated with conflict between status quo states that are uncertain about others' territorial revisionism. Here, inefficiency arises because arming to deter lowers a state's value for living with the status quo, which creates a security externality and a feedback loop. The model both synthesizes and revises a range of theoretical arguments about the determinants of interstate cooperation and conflict.