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Anarchy and Autarky: Endogenous Predation as a Barrier to Trade

Author

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  • James E. Anderson

    (Boston College)

  • Douglas Marcouiller, S.J.

    (Boston College)

Abstract

Market exchange is subject to an endogenously determined level of predation which impedes specialization and gains from trade. We construct a model in which utility-maximizing agents opt between careers in production and careers in predation. Three types of equilibria may emerge: autarky (with no predation and no defense), insecure exchange equilibria (with predation and defense), and secure exchange equilibria (in which defense completely deters predation). Trading equilibria, two-thirds of them secure, are supported only in a narrow range of security parameter values. Since changes in the technologies of defense and predation have terms of trade effects, some producers may be hurt by enhanced security. We show cases of 'immiserizing security' in which producers in large poor countries are harmed by increased security.

Suggested Citation

  • James E. Anderson & Douglas Marcouiller, S.J., 1997. "Anarchy and Autarky: Endogenous Predation as a Barrier to Trade," Boston College Working Papers in Economics 383, Boston College Department of Economics, revised 01 Oct 2001.
  • Handle: RePEc:boc:bocoec:383
    Note: This paper was previously circulated as "Trade and Security, I: Anarchy".
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    insecure trade; predation; transactions costs;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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