The Biological Endowment Curse

Standard models of international trade treat factor endowments as exogenous and stable. This paper argues that biological invasions induced by trade itself erode productive endowments, generating a feedback loop from comparative advantage to invasive species pressure and back. We call this mechanism the biological endowment curse : the very endowment that confers comparative advantage in agriculture raises the exposure to invasion, which in turn degrades the endowment. This dynamic cost of trade has been largely absent from the received theory of comparative advantage. We formalise this idea in two steps. First, in a single-country model with Cobb-Douglas endowment dynamics, we establish the existence and global stability of a long-run equilibrium and show that the equilibrium healthy endowment decreases with import pressure and with ecological fragility. Second, in a two-country discrete-time game, we derive closed-form expressions for the Markov Perfect Nash equilibrium and the cooperative solution. Both countries under-invest in biosecurity at Nash, and the under-investment gap is larger for countries with stronger regeneration capacity and greater commercial interdependence. We then characterise the optimal international agreement, modelled as a Nash equilibrium in trigger strategies. A key structural result is that the incentive compatibility constraint reduces to a purely parametric condition, independent of the current state of endowments. When the pure trigger fails, trade linkage can restore viability. Finally, policy implications are discussed.