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Fifty-four Forty or Fight!

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  • Herschel I. Grossman

Abstract

This paper develops an explanation for historical differences in the ways in which territorial disputes between sovereign states have been resolved. The main innovation in the analysis is to allow for three possible equilibria: ú an unfortified border; ú a fortified but peaceful border; and ú armed conflict. The analysis shows that the possibility of a credible agreement to divide a contested territory and to leave the resulting border unfortified depends on the effectiveness of spending on arms by one state relative to another and on the importance that states attach to the potential costs of future armed conflicts. The analysis also shows that, if all relevant parameters are common knowledge, then, even if an agreement to have an unfortified border would not be credible, states can resolve a territorial dispute peacefully by dividing the contested territory and fortifying the border. Finally, the paper points out that unverifiable innovations, especially innovations in military technology, can cause a peaceful settlement to break down, resulting in an armed conflict that in turn can provide the basis for a new peaceful settlement.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9635.

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Date of creation: Apr 2003
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Handle: RePEc:nbr:nberwo:9635

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  1. Grossman, Herschel I, 1999. "Kleptocracy and Revolutions," Oxford Economic Papers, Oxford University Press, vol. 51(2), pages 267-83, April.
  2. Hess, Gregory D & Orphanides, Athanasios, 1995. "War Politics: An Economic, Rational-Voter Framework," American Economic Review, American Economic Association, vol. 85(4), pages 828-46, September.
  3. Alesina, A. & Drazen, A., 1991. "Why Are Stabilizations Delayed?," Papers 6-91, Tel Aviv - the Sackler Institute of Economic Studies.
  4. Garfinkel, M.R., 1992. ""Domestic Politics and International Conflict"," Papers 90-92-30, California Irvine - School of Social Sciences.
  5. Dimitriy Gershenson & Herschel I. Grossman, 1999. "Civil Conflict: Ended Or Never Ending?," Working Papers 99-31, Brown University, Department of Economics.
  6. Jeremy A.Rogoff Bulow & Kenneth, 1986. "A Constant Recontracting Model of Sovereign Debt," University of Chicago - George G. Stigler Center for Study of Economy and State 43, Chicago - Center for Study of Economy and State.
  7. Skaperdas, Stergios & Syropoulos, Constantinos, 1996. "Can the shadow of the future harm cooperation?," Journal of Economic Behavior & Organization, Elsevier, vol. 29(3), pages 355-372, May.
  8. Gregory D. Hess & Athanasios Orphanides, 2001. "War and Democracy," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 776-810, August.
  9. Garfinkel, Michelle R, 1990. "Arming as a Strategic Investment in a Cooperative Equilibrium," American Economic Review, American Economic Association, vol. 80(1), pages 50-68, March.
  10. Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, vol. 49(03), pages 379-414, June.
  11. Garfinkel, M.R. & Skaperdas, S., 2000. "Conflict without Misperceptions or Incomplete Information: how the Future Matters," Papers 99-00-11, California Irvine - School of Social Sciences.
  12. Alberto Alesina & Enrico Spolaore, 1995. "On the Number and Size of Nations," NBER Working Papers 5050, National Bureau of Economic Research, Inc.
  13. Grossman, Herschel I & Kim, Minseong, 1995. "Swords or Plowshares? A Theory of the Security of Claims to Property," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1275-88, December.
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Cited by:
  1. Kjell Hausken, 2005. "Production and Conflict Models Versus Rent-Seeking Models," Public Choice, Springer, vol. 123(1), pages 59-93, April.
  2. Herschel I. Grossman, 2003. "Choosing Between Peace and War," NBER Working Papers 10180, National Bureau of Economic Research, Inc.
  3. Katharina Wick & Erwin Bulte, 2006. "Contesting resources – rent seeking, conflict and the natural resource curse," Public Choice, Springer, vol. 128(3), pages 457-476, September.

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