IDEAS home Printed from https://ideas.repec.org/p/drx/wpaper/202511.html
   My bibliography  Save this paper

Trade Interdependence, Arming and the Choice between War and Peace

Author

Listed:
  • Michelle Garfinkel

    (University of California-Irvine)

  • Constantinos Syropoulos

    (School of Economics, Drexel University)

Abstract

We consider a dynamic setting where two countries with competing claims to a resource/asset first arm and then choose whether to resolve their dispute through war or peacefully through settlement. War precludes international trade and can be destructive, but also locks gains and eliminates arming costs in the future. By contrast, a peaceful resolution, possibly supported by arming, avoids destruction and allows for mutually advantageous trade; yet future settlements must be renegotiated under the threat of war. We characterize the conditions under which peace is stable and show that, depending on war’s destructiveness, time preferences, and the distribution of resource endowments, greater gains from trade can pacify international tensions, but possibly only for more uneven endowment distributions.

Suggested Citation

  • Michelle Garfinkel & Constantinos Syropoulos, 2025. "Trade Interdependence, Arming and the Choice between War and Peace," Working Papers 202511, Center for Global Policy Analysis, LeBow College of Business, Drexel University.
    • Handle: RePEc:drx:wpaper:202511
    as

    Download full text from publisher

    File URL: https://www.lebow.drexel.edu/sites/default/files/2025-04/202511-cgpa-trade-interdependence.pdf
    File Function: First version, 2025
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Garfinkel, Michelle R. & Syropoulos, Constantinos & Yotov, Yoto V., 2020. "Arming in the global economy: The importance of trade with enemies and friends," Journal of International Economics, Elsevier, vol. 123(C).
    2. Yang-Ming Chang & Manaf Sellak, 2019. "A game-theoretic analysis of international trade and political conflict over external territories," Public Choice, Springer, vol. 179(3), pages 209-228, June.
    3. James E. Anderson & Douglas Marcouiller, 2005. "Anarchy And Autarky: Endogenous Predation As A Barrier To Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 189-213, February.
    4. Anbarci, Nejat & Skaperdas, Stergios & Syropoulos, Constantinos, 2002. "Comparing Bargaining Solutions in the Shadow of Conflict: How Norms against Threats Can Have Real Effects," Journal of Economic Theory, Elsevier, vol. 106(1), pages 1-16, September.
    5. Skaperdas, Stergios & Syropoulos, Constantinos, 1996. "Can the shadow of the future harm cooperation?," Journal of Economic Behavior & Organization, Elsevier, vol. 29(3), pages 355-372, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michelle R. Garfinkel & Constantinos Syropoulos, 2025. "Interstate Conflict and International Trade," CESifo Working Paper Series 11801, CESifo.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michelle R. Garfinkel & Constantinos Syropoulos, 2022. "International Trade and Stable Resolutions of Resource Disputes," CESifo Working Paper Series 10040, CESifo.
    2. Garfinkel, Michelle R. & Syropoulos, Constantinos, 2015. "Trade openness and the settlement of domestic disputes in the shadow of the future," Research in Economics, Elsevier, vol. 69(2), pages 191-213.
    3. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 2, chapter 22, pages 649-709, Elsevier.
    4. Michelle R. Garfinkel & Constantinos Syropoulos, 2019. "On Trade and the Stability of (Armed) Peace," Working Papers 181910, University of California-Irvine, Department of Economics.
    5. Michelle R. Garfinkel & Stergios Skaperdas & Constantinos Syropoulos, 2009. "International Trade and Transnational Insecurity: How Comparative Advantage and Power are Jointly Determined," Working Papers 080921, University of California-Irvine, Department of Economics.
    6. Stergios Skaperdas & Constantinos Syropoulos, 2002. "Insecure Property and the Efficiency of Exchange," Economic Journal, Royal Economic Society, vol. 112(476), pages 133-146, January.
    7. Michelle R. Garfinkel, 2010. "Political Institutions and War Initiation: The Democratic Peace Hypothesis Revisited," Working Papers 101107, University of California-Irvine, Department of Economics.
    8. Garfinkel, Michelle R. & Syropoulos, Constantinos & Zylkin, Thomas, 2022. "Prudence versus predation and the gains from trade," Journal of Economic Theory, Elsevier, vol. 201(C).
    9. Stergios Skaperdas, 2006. "Bargaining Versus Fighting," Defence and Peace Economics, Taylor & Francis Journals, vol. 17(6), pages 657-676.
    10. Changxia Ke & Kai A. Konrad & Florian Morath, 2015. "Alliances In The Shadow Of Conflict," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 854-871, April.
    11. Garfinkel, Michelle R. & Skaperdas, Stergios & Syropoulos, Constantinos, 2015. "Trade and insecure resources," Journal of International Economics, Elsevier, vol. 95(1), pages 98-114.
    12. Garfinkel, Michelle R. & Syropoulos, Constantinos & Yotov, Yoto V., 2020. "Arming in the global economy: The importance of trade with enemies and friends," Journal of International Economics, Elsevier, vol. 123(C).
    13. Mehrdad Vahabi, 2012. "Avant-Propos," Revue d'économie politique, Dalloz, vol. 122(2), pages 135-151.
    14. Martin C. McGuire, 2020. "Trade and the predatory state: Ricardian exchange with armed competition for resources—a diagrammatic exposition," Public Choice, Springer, vol. 182(3), pages 459-494, March.
    15. Stergios Skaperdas, 2008. "An economic approach to analyzing civil wars," Economics of Governance, Springer, vol. 9(1), pages 25-44, January.
    16. Indranil Dutta & Paul Madden & Ajit Mishra, 2014. "Group Inequality and Conflict," Manchester School, University of Manchester, vol. 82(3), pages 257-283, June.
    17. Michelle Garfinkel & Stergios Skaperdas & Constantinos Syropoulos, 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.
    18. Mehrdad Vahabi, 2012. "Political Economy of Conflict Foreword," Revue d'économie politique, Dalloz, vol. 122(2), pages 153-169.
    19. Constantinos Syropoulos & Thomas Zylkin, 2015. "The Problem of Peace: A Story of Corruption, Destruction, and Rebellion," School of Economics Working Paper Series 2015-5, LeBow College of Business, Drexel University.
    20. Maxime Menuet & Petros G. Sekeris, 2021. "Overconfidence and conflict," Economic Inquiry, Western Economic Association International, vol. 59(4), pages 1483-1499, October.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D30 - Microeconomics - - Distribution - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F10 - International Economics - - Trade - - - General
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:drx:wpaper:202511. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Yoto V. Yotov (email available below). General contact details of provider: https://edirc.repec.org/data/cgdreus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.