When a resource like oil is domestically contested, trade patters and welfare can be very different than when property rights are costlessly enforced. Whereas (small-country) importers of the contested resource gain unambiguously relative to autarky, exporters of the contested resource lose under free trade, unless the world price of the resource is sufficiently high. Regardless of what price obtains in world markets, countries tend to over-export the contested resource compared to the absence of conflict. For a wide range of prices, higher international prices of the contested resource reduce welfare, an instance of the "natural resource curse."
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Volume (Year): 76 (2008) Issue (Month): 2 (December) Pages: 296-308 Download reference. The following formats are available: HTML
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Michelle R. Garfinkel & Stergios Skaperdas & Constantinos Syropoulos, 2006.
"Globalization and Domestic Conflict,"
Working Papers
050601, University of California-Irvine, Department of Economics.
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Michelle R. Garfinkel & Stergios Skaperdas, 2006.
"Economics of Conflict: An Overview,"
Working Papers
050623, University of California-Irvine, Department of Economics, revised Sep 2006.
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