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Rules for Dividing a Disputed Resource in the Context of the Classical Liberal Argument for Peace

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  • Garfinkel Michelle R.

    (Department of Economics, University of California, Irvine, 92697-5100, USA)

  • Syropoulos Constantinos

    (School of Economics, LeBow College of Business, Drexel University, Philadelphia, PA 19104, USA)

Abstract

In this paper, we study alternative forms of conflict resolution, both peaceful and non-peaceful, between two countries that compete for claims to a resource used to produce potentially traded goods. Consistent with the classical liberal argument, peace supports mutually beneficial trade, whereas war preempts it. War always induces countries to allocate resources into non-contractible arming (“guns”) for superiority in conflict. Under peaceful settlement, countries might choose to arm as well for gaining leverage in negotiations, but arming is typically less than what it is under war. Building on the observation that arming itself affects the countries’ bargaining sets, we compare the efficiency properties of division rules generated by three prominent bargaining solutions – namely, splitting the surplus, equal sacrifice, and Nash bargaining – and show how they depend on the gains from trade.

Suggested Citation

  • Garfinkel Michelle R. & Syropoulos Constantinos, 2018. "Rules for Dividing a Disputed Resource in the Context of the Classical Liberal Argument for Peace," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 24(1), pages 1-16, February.
    • Handle: RePEc:bpj:pepspp:v:24:y:2018:i:1:p:16:n:4
    DOI: 10.1515/peps-2017-0036
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    Cited by:

    1. Michelle R. Garfinkel & Constantinos Syropoulos, 2019. "Problems of commitment in arming and war: how insecurity and destruction matter," Public Choice, Springer, vol. 178(3), pages 349-369, March.
    2. Garfinkel, Michelle R. & Syropoulos, Constantinos, 2021. "Self-enforcing peace agreements that preserve the status quo," Games and Economic Behavior, Elsevier, vol. 130(C), pages 148-178.
    3. Michelle R. Garfinkel & Constantinos Syropoulos, 2019. "On Trade and the Stability of (Armed) Peace," Working Papers 181910, University of California-Irvine, Department of Economics.
    4. Garfinkel, Michelle R. & Syropoulos, Constantinos & Yotov, Yoto V., 2020. "Arming in the global economy: The importance of trade with enemies and friends," Journal of International Economics, Elsevier, vol. 123(C).
    5. Michelle Garfinkel & Constantinos Syropoulos, 2022. "International Trade and Stable Resolutions of Resource Disputes," School of Economics Working Paper Series 2022-9, LeBow College of Business, Drexel University.

    More about this item

    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D30 - Microeconomics - - Distribution - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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