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A Dynamic Theory of Resource Wars

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  • Daron Acemoglu
  • Mikhail Golosov
  • Aleh Tsyvinski
  • Pierre Yared

Abstract

We develop a dynamic theory of resource wars and study the conditions under which such wars can be prevented. Our focus is on the interaction between the scarcity of resources and the incentives for war in the presence of limited commitment. We show that a key parameter determining the incentives for war is the elasticity of demand. Our first result identifies a novel externality that can precipitate war: price-taking firms fail to internalize the impact of their extraction on military action. In the case of inelastic resource demand, war incentives increase over time and war may become inevitable. Our second result shows that in some situations, regulation of prices and quantities by the resource-rich country can prevent war, and when this is the case, there will also be slower resource extraction than the Hotelling benchmark (with inelastic demand). Our third result is that because of limited commitment and its implications for armament incentives, regulation of prices and quantities might actually precipitate war even in some circumstances where wars would not have arisen under competitive markets. Copyright 2012, Oxford University Press.

Suggested Citation

  • Daron Acemoglu & Mikhail Golosov & Aleh Tsyvinski & Pierre Yared, 2012. "A Dynamic Theory of Resource Wars," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 283-331.
  • Handle: RePEc:oup:qjecon:v:127:y:2012:i:1:p:283-331
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    File URL: http://hdl.handle.net/10.1093/qje/qjr048
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    Cited by:

    1. repec:eee:resene:v:52:y:2018:i:c:p:1-17 is not listed on IDEAS
    2. Tim Willems & Shaun Larcom & Mare Sarr, 2014. "Dictators Walking the Mogadishu Line: How Men Become Monsters and Monsters Become Men," Economics Series Working Papers 701, University of Oxford, Department of Economics.
    3. Francesco Caselli & Massimo Morelli & Dominic Rohner, 2015. "The Geography of Interstate Resource Wars," The Quarterly Journal of Economics, Oxford University Press, vol. 130(1), pages 267-315.
    4. Garfinkel, Michelle R. & Skaperdas, Stergios & Syropoulos, Constantinos, 2015. "Trade and insecure resources," Journal of International Economics, Elsevier, vol. 95(1), pages 98-114.
    5. Dziubinski, M. & Goyal, S. & Minarsch, D . E. N., 2017. "The Strategy of Conquest," Cambridge Working Papers in Economics 1704, Faculty of Economics, University of Cambridge.
    6. van der Ploeg, Frederick & Rohner, Dominic, 2012. "War and natural resource exploitation," European Economic Review, Elsevier, vol. 56(8), pages 1714-1729.
    7. Seitz, Michael & Tarasov, Alexander & Zakharenko, Roman, 2013. "Trade Costs, Conflicts, and Defense Spending," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 404, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    8. Erik O. Kimbrough & Kevin Laughren & Roman Sheremeta, 2017. "War and Conflict in Economics: Theories, Applications, and Recent Trends," Discussion Papers dp17-10, Department of Economics, Simon Fraser University.
    9. Petros G. Sekeris, 2014. "The tragedy of the commons in a violent world," RAND Journal of Economics, RAND Corporation, vol. 45(3), pages 521-532, September.
    10. Raouf Boucekkine & Fabien Prieur & Klarizze Puzon, 2014. "On the Timing of Political Regime Changes: Theory and Application to the Arab Spring," Working Papers 2014.104, Fondazione Eni Enrico Mattei.
    11. Frederick van der Ploeg, 2012. "Resource Wars and Confiscation Risk," OxCarre Working Papers 097, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    12. Hannu Vartiainen, 2015. "Dynamic stable set as a tournament solution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(2), pages 309-327, September.
    13. Chan, Kenneth S. & Laffargue, Jean-Pierre, 2016. "Plunder and tribute in a Malthusian world," Mathematical Social Sciences, Elsevier, vol. 84(C), pages 138-150.
    14. Rodriguez Acosta, Mauricio, 2016. "Essays in political economy and resource economic : A macroeconomic approach," Other publications TiSEM 1e39ef1b-43a2-4f95-892c-6, Tilburg University, School of Economics and Management.
    15. Francesco Caselli, 2012. "The Geography of Inter-State Resource Wars," 2012 Meeting Papers 1174, Society for Economic Dynamics.
    16. Fenske, James & Kala, Namrata, 2015. "Climate and the slave trade," Journal of Development Economics, Elsevier, vol. 112(C), pages 19-32.
    17. Stuermer, Martin, 2014. "Industrialization and the demand for mineral commodities," Working Papers 1413, Federal Reserve Bank of Dallas.
    18. Garfinkel , Michelle & Skaperdas, Stergios & Syropoulos, Constantinos, 2012. "Trade and Insecure Resources: Implications for Welfare and Comparative Advantage," School of Economics Working Paper Series 2012-8, LeBow College of Business, Drexel University.
    19. Seitz, Michael & Tarasov, Alexander & Zakharenko, Roman, 2015. "Trade costs, conflicts, and defense spending," Journal of International Economics, Elsevier, vol. 95(2), pages 305-318.
    20. Joeri Smits & Yibekal Tessema & Takuto Sakamoto & Richard Schodde, 2016. "The inequality-resource curse of conflict: Heterogeneous effects of mineral deposit discoveries," WIDER Working Paper Series 046, World Institute for Development Economic Research (UNU-WIDER).
    21. repec:eee:deveco:v:127:y:2017:i:c:p:297-305 is not listed on IDEAS

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    JEL classification:

    • F00 - International Economics - - General - - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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