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Atoms for Peace, Redux: Energy Codependency for Sustained Cooperation on the Korean Peninsula

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  • Beardsley Kyle

    () (Emory University)

  • Lim Jamus J

    () (The World Bank and Santa Cruz Center for International Economics)

Abstract

North Korea's nuclear program is a threat to sustained stability on the Korean peninsula. Unfortunately, the traditional notion of “Atoms for Peace" has been a failure in the engagement of the North. In this paper we propose a novel approach to mutual cooperation in energy provision on the Korean peninsula, premised on having North Korea host reactors that deliver energy to South Korea. We establish conditions where there exists a stable, time-consistent equilibrium where the North never finds it in its interest to disrupt energy supplies to the South, and where the South is willing to pay the fixed costs of nuclear plant construction in exchange for a discounted stream of energy supply from the North. We also show that third-party income streams can augment the cooperative relationship.

Suggested Citation

  • Beardsley Kyle & Lim Jamus J, 2009. "Atoms for Peace, Redux: Energy Codependency for Sustained Cooperation on the Korean Peninsula," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 15(1), pages 1-31, August.
  • Handle: RePEc:bpj:pepspp:v:15:y:2009:i:1:n:4
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    References listed on IDEAS

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    1. repec:cup:apsrev:v:98:y:2004:i:02:p:231-241_00 is not listed on IDEAS
    2. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
    3. Isard Walter & Azis Iwan J., 1999. "A Cooperative Analysis Procedure for Use by Diplomats and Negotiators: With a Proposed Step for Resolving Conflict on the Korean Peninsula," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 5(1), pages 1-24, January.
    4. Masahiko Aoki, 2001. "Toward a Comparative Institutional Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011875.
    5. Powell, Robert, 2006. "War as a Commitment Problem," International Organization, Cambridge University Press, vol. 60(01), pages 169-203, January.
    6. Soo-Bin Park, 2004. "The North Korean Economy: Current Issues and Prospects," Carleton Economic Papers 04-05, Carleton University, Department of Economics.
    7. B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
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