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Networks of Military Alliances, Wars, and International Trade

Author

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  • Matthew O. Jackson

    (Department of Economics, Stanford University, Santa Fe Institute and CIFAR)

  • Stephen Nei

    (Department of Economics, Stanford University)

Abstract

We investigate the role of networks of military alliances in preventing or encouraging wars between groups of countries. A country is vulnerable to attack if there is some fully-allied group of countries that can defeat that country and its (remaining) allies based on a function of their collective military strengths. Even with such a demanding notion of vulnerability, we show that there do not exist any networks that are stable against the addition and deletion of alliances. We then show that economic benefits from international trade can provide incentives to form alliances in ways that restore stability and prevent wars. In closing, we briefly examine the historical data on interstate wars and trade, noting that a dramatic (more than ten-fold) drop in the rate of interstate wars since 1960 is paralleled by an unprecedented growth in trade over the same period.

Suggested Citation

  • Matthew O. Jackson & Stephen Nei, 2014. "Networks of Military Alliances, Wars, and International Trade," Working Papers 2014.46, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2014.46
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    References listed on IDEAS

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    Cited by:

    1. Matthew O. Jackson & Brian W. Rogers & Yves Zenou, 2017. "The Economic Consequences of Social-Network Structure," Journal of Economic Literature, American Economic Association, vol. 55(1), pages 49-95, March.
    2. Marcin Dziubinski & Sanjeev Goyal & Adrien Vigier, 2015. "Conflict and Networks," Cambridge Working Papers in Economics 1565, Faculty of Economics, University of Cambridge.
    3. Frank Emmert-Streib & Aliyu Musa & Kestutis Baltakys & Juho Kanniainen & Shailesh Tripathi & Olli Yli-Harja & Herbert Jodlbauer & Matthias Dehmer, 2017. "Computational Analysis of the structural properties of Economic and Financial Networks," Papers 1710.04455, arXiv.org.
    4. Hiller, Timo, 2017. "Friends and enemies: a model of signed network formation," Theoretical Economics, Econometric Society, vol. 12(3), September.
    5. Barry Eichengreen & Arnaud J. Mehl & Livia Chitu, 2017. "Mars or Mercury? The Geopolitics of International Currency Choice," NBER Working Papers 24145, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Alliances; Conflict; War; Networks; International Trade; Treaties;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • F10 - International Economics - - Trade - - - General

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