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A two-period model of natural resources and inter-country conflicts: Effects of trade sanctions

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  • Hasan, Md Didarul
  • Lahiri, Sajal

Abstract

We develop a two-period general equilibrium model linking natural resources to inter-country conflict, treating resource extraction and wage rate are endogenous. First, we characterize the war equilibrium and derive a number of properties of it. Second, we examine the effects of different types of trade sanctions imposed by the international community on war efforts of the two countries. We find that a temporary current sanction on both countries, or even on one of the countries, will be counter-productive, and an anticipated future sanction on both countries will unambiguously reduce war intensity. Whether an anticipated future sanction on one of countries will reduce war intensity will depend on the level of resource stock; the effect of a permanent sanction on both countries is ambiguous: war intensities will fall only if the resource stocks of the countries are sufficiently high.

Suggested Citation

  • Hasan, Md Didarul & Lahiri, Sajal, 2015. "A two-period model of natural resources and inter-country conflicts: Effects of trade sanctions," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 5(2), pages 76-100.
  • Handle: RePEc:gok:ijdcv1:v:5:y:2015:i:2:p:76-100
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    References listed on IDEAS

    as
    1. Paola Conconi & Nicolas Sahuguet & Maurizio Zanardi, 2014. "Democratic Peace And Electoral Accountability," Journal of the European Economic Association, European Economic Association, vol. 12(4), pages 997-1028, August.
    2. Zsolt Becsi & Sajal Lahiri, 2007. "Bilateral war in a multilateral world: carrots and sticks for conflict resolution," Canadian Journal of Economics, Canadian Economics Association, vol. 40(4), pages 1168-1187, November.
    3. Garfinkel, Michelle R. & Skaperdas, Stergios & Syropoulos, Constantinos, 2015. "Trade and insecure resources," Journal of International Economics, Elsevier, vol. 95(1), pages 98-114.
    4. Janus, Thorsten, 2012. "Natural resource extraction and civil conflict," Journal of Development Economics, Elsevier, vol. 97(1), pages 24-31.
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    More about this item

    Keywords

    Natural Resources; Inter-State Conflicts; Sanctions;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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