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 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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Bibliographic InfoPaper provided by College of the Holy Cross, Department of Economics in its series Working Papers with number 0411.
Length: 39 pages
Date of creation: Dec 2004
Date of revision:
Publication status: Published in Journal of Economic Behavior and Organization, November 2008, Vol. 68:2, pp. 422-432.
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Fax: (508) 793-3708
Web page: http://www.holycross.edu/departments/economics/website/
More information through EDIRC
appropriation; property rights; piracy; trade; edgeworth box;
Other versions of this item:
- Anderton, Charles H. & Carter, John R., 2008. "Vulnerable trade: The dark side of an Edgeworth box," Journal of Economic Behavior & Organization, Elsevier, vol. 68(2), pages 422-432, November.
- 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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