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Networks of Military Alliances, Wars, and International Trade

  • Matthew O. Jackson
  • Stephen M. Nei

We investigate the role of networks of alliances in preventing (multilateral) interstate wars. We first show that, in the absence of international trade, no network of alliances is peaceful and stable. We then show that international trade induces peaceful and stable networks: trade increases the density of alliances so that countries are less vulnerable to attack and also reduces countries' incentives to attack an ally. We present historical data on wars and trade, noting that the dramatic drop in interstate wars since 1950, and accompanying densification and stabilization of alliances, are consistent with the model but not other prominent theories.

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File URL: http://arxiv.org/pdf/1405.6400
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Paper provided by arXiv.org in its series Papers with number 1405.6400.

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Date of creation: May 2014
Date of revision: Jun 2015
Handle: RePEc:arx:papers:1405.6400
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  1. Reuven Glick & Alan M. Taylor, 2005. "Collateral damage: trade disruption and the economic impact of war," Working Paper Series 2005-11, Federal Reserve Bank of San Francisco.
  2. Bernhofen, Daniel M. & El-Sahli, Zouheir & Kneller, Richard, 2013. "Estimating the Effects of the Container Revolution on World Trade," Working Papers 2013:4, Lund University, Department of Economics.
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  4. Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, vol. 49(03), pages 379-414, June.
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  7. Jordan, J.S., 2006. "Pillage and property," Journal of Economic Theory, Elsevier, vol. 131(1), pages 26-44, November.
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  9. Antoni Estevadeordal & Brian Frantz & Alan M. Taylor, 2002. "The Rise and Fall of World Trade, 1870-1939," NBER Working Papers 9318, National Bureau of Economic Research, Inc.
  10. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
  11. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
  12. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer, vol. 7(2), pages 283-290.
  13. David Rietzke & Brian Roberson, 2010. "The Robustness of ‘Enemy-of-My-Enemy-is-My-Friend’ Alliances," Purdue University Economics Working Papers 1258, Purdue University, Department of Economics.
  14. Matthew O. Jackson & Tomas Rodriguez-Barraquer & Xu Tan, 2012. "Social Capital and Social Quilts: Network Patterns of Favor Exchange," American Economic Review, American Economic Association, vol. 102(5), pages 1857-97, August.
  15. Francis Bloch & Matthew Jackson, 2006. "Definitions of equilibrium in network formation games," International Journal of Game Theory, Springer, vol. 34(3), pages 305-318, October.
  16. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
  17. Michele Piccione & Ariel Rubinstein, 2007. "Equilibrium in the Jungle," Economic Journal, Royal Economic Society, vol. 117(522), pages 883-896, 07.
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