National Security or Private Profits? Trade in Dual-Use Commodities
This paper develops a simple model of imperfectly competitive trade in commodities with both military and civilian applications, a.k.a. dual-use commodities. We consider the role of export barriers and foreign economic aid in encouraging peaceful rather than military application of dual-use commodities in importing countries. When governments conjecture the profit-shifting effect of their policies, Nash equilibrium policies combine export barriers and foreign aid.
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