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Vulnerable trade: The dark side of an Edgeworth box

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  • Anderton, Charles H.
  • Carter, John R.

Abstract

We examine incentives to seize and defend goods offered for trade in an Edgeworth box economy. Appropriation possibilities generate 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 equilibrium with trade ceases to exist in the Edgeworth box economy.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jeborg:v:68:y:2008:i:2:p:422-432
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    Cited by:

    1. Anderton,Charles H. & Carter,John R., 2009. "Principles of Conflict Economics," Cambridge Books, Cambridge University Press, number 9780521875578, December.
    2. Magnus Hoffmann, 2010. "Enforcement of property rights in a barter economy," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 34(2), pages 249-263, February.
    3. Hoffmann, Magnus, 2006. "Enforcement of Property Rights in a Barter Economy," MPRA Paper 3260, University Library of Munich, Germany.
    4. Andrea Mantovi, 2014. "On Luxury and Equilibrium," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 6(2), pages 87-118, December.

    More about this item

    Keywords

    Appropriation Conflict Trade Piracy Edgeworth box;

    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; Revolutions
    • F10 - International Economics - - Trade - - - General

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