Vulnerable Trade: The Dark Side of an Edgeworth Box

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Vulnerable Trade: The Dark Side of an Edgeworth Box

Author Info

Charles Anderton () (Department of Economics, College of the Holy Cross)
John Carter () (Department of Economics, College of the Holy Cross)

Abstract

We examine incentives to seize and defend goods offered for trade in an Edgeworth box economy. Appropriation possibilities generate an 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 trade and appropriation are driven to zero, or one or both players are rendered indifferent to trade.

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Publisher Info
Paper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number 0411.

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Length: 39 pages
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:hcx:wpaper:0411

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Find related papers by JEL classification:
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

This paper has been announced in the following NEP Reports:

NEP-ALL-2005-01-23 (All new papers)
NEP-MIC-2005-01-23 (Microeconomics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Carter, John R. & Anderton, Charles H., 2001. "An experimental test of a predator-prey model of appropriation," Journal of Economic Behavior & Organization, Elsevier, vol. 45(1), pages 83-97, May. [Downloadable!] (restricted)
Anderton, Charles H & Anderton, Roxane A & Carter, John R, 1999. "Economic Activity in the Shadow of Conflict," Economic Inquiry, Oxford University Press, vol. 37(1), pages 166-79, January.
Charles H. Anderton, 2003. "Conflict and Trade in a Predator/Prey Economy," Review of Development Economics, Blackwell Publishing, vol. 7(1), pages 15-29, February. [Downloadable!] (restricted)
James E. Anderson & Douglas Marcouiller, S.J., 1997. "Anarchy and Autarky: Endogenous Predation as a Barrier to Trade," Boston College Working Papers in Economics 383, Boston College Department of Economics, revised 01 Oct 2001. [Downloadable!]
Other versions:
- James E. Anderson & Douglas Marcouiller, 2005. "Anarchy And Autarky: Endogenous Predation As A Barrier To Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 189-213, 02. [Downloadable!] (restricted)
Anderton, Charles H., 1999. "Appropriation possibilities in a simple exchange economy," Economics Letters, Elsevier, vol. 63(1), pages 77-83, April. [Downloadable!] (restricted)

Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Hoffmann, Magnus, 2006. "Enforcement of Property Rights in a Barter Economy," MPRA Paper 3260, University Library of Munich, Germany. [Downloadable!]

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