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Plunder or Trade?

  • Robert Rider
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    Plunder and trade are theoretically and historically entwined in complex ways. This paper examines when rational players will choose one or both by employing a model of plunder within an evolutionary game theoretic framework. Evolutionary stable strategy equilibria are derived and the replicator dynamics are examined for simple two-by-two symmetric games. Not only are positive defense allocations necessary for trade, implying that all trade is of a contested nature, but the defense technology must also exhibit sufficient effectiveness relative to the plunder technology. A continuum of possible exchanges is proposed that is based on the effectiveness of enforcing property claims. For high levels of transactions costs, plunder dominates. As transactions costs decline, mutual trade emerges as one possible exchange mechanism. All market exchange entails some cost of enforcement; it is contested. Insufficient enforcement of property claims produces mutual plunder as the dominant exchange mechanism. Some implications are suggested for institutional evolution. C7 K4 N4

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    Article provided by Taylor & Francis Journals in its journal Defence and Peace Economics.

    Volume (Year): 13 (2002)
    Issue (Month): 1 ()
    Pages: 199-214

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    Handle: RePEc:taf:defpea:v:13:y:2002:i:1:p:199-214
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