Vulnerable trade: The dark side of an Edgeworth box
AbstractWe examine incentives to seize and defend goods offered for trade in an Edgeworth box economy. Appropriation possibilities generate equilibrium of coerced redistribution and voluntary trade in a reduced box. Potential mutual gains remain untaken because the prospect of piracy creates a price wedge, wherein the effective relative price is lowered for the exporter and raised for the importer. As the vulnerability of one or both goods increases, the price wedge widens, causing trade to diminish. If vulnerability becomes sufficiently high, then equilibrium with trade ceases to exist in the Edgeworth box economy.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 68 (2008)
Issue (Month): 2 (November)
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Web page: http://www.elsevier.com/locate/jebo
Appropriation Conflict Trade Piracy Edgeworth box;
Other versions of this item:
- Charles Anderton & John Carter, 2004. "Vulnerable Trade: The Dark Side of an Edgeworth Box," Working Papers 0411, College of the Holy Cross, Department of Economics.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- F10 - International Economics - - Trade - - - General
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