Exchange of Goods or Exchange of Blows? New Directions in Conflict and Exchange

Although conflict economics has expanded its interest post-Cold War violence, our theme is that conflict potential weaves itself into the decision of consumers, producers, and traders in ways that economists have essentially ignored. This is the lesson of our literature review and of our model, which combines Ricardian trade with the potential for appropriation under ratio and logistic conflict technology. The model shows that economic activities like production and exchange are fundamentally altered in the presence of conflict potential. We also find that arms races, arms control, violence, and technology of conflict exist in non-international forms within the production/exchange economy.