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Peace and War with Endogenous State Capacity

Author

Listed:
  • Michael McBride

    () (Department of Economics, University of California-Irvine)

  • Gary Milante

    () (World Bank)

  • Stergios Skaperdas

    () (Department of Economics, University of California-Irvine)

Abstract

We explore how peace or war can occur in the presence of commitment problems. These problems can be reduced by institutions of good governance or, alternatively, state capacity which (i) can be considered a collective good and (ii) can be improved through investments. We show how the likelihood of a peace agreement depends on the level of state capacity and on investments in state capacity made by adversaries. In accordance with existing evidence but contrary to various theories of conflict, we find that income levels unambiguously increase the chance of peace. Among other issues, we discuss the critical role of external actors in encouraging or discouraging commitment and in developing good governance institutions.

Suggested Citation

  • Michael McBride & Gary Milante & Stergios Skaperdas, 2009. "Peace and War with Endogenous State Capacity," Working Papers 091002, University of California-Irvine, Department of Economics.
  • Handle: RePEc:irv:wpaper:091002
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    References listed on IDEAS

    as
    1. McBride, Michael & Skaperdas, Stergios, 2014. "Conflict, settlement, and the shadow of the future," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 75-89.
    2. Stergios Skaperdas, 2006. "Bargaining Versus Fighting," Defence and Peace Economics, Taylor & Francis Journals, vol. 17(6), pages 657-676.
    3. Hirshleifer, Jack, 1995. "Theorizing about conflict," Handbook of Defense Economics,in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 7, pages 165-189 Elsevier.
    4. Mario Chacón & James A. Robinson & Ragnar Torvik, 2011. "When is Democracy an Equilibrium? Theory and Evidence from Colombia’s La Violencia," Journal of Conflict Resolution, Peace Science Society (International), vol. 55(3), pages 366-396, June.
    5. Michael McBride & Stergios Skaperdas, 2005. "Explaining Conflict in Low-Income Countries: Incomplete Contracting in the Shadow of the Future," CESifo Working Paper Series 1636, CESifo Group Munich.
    6. 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.
    7. Garance Genicot & Stergios Skaperdas, 2002. "Investing in Conflict Management," Journal of Conflict Resolution, Peace Science Society (International), vol. 46(1), pages 154-170, February.
    8. Michelle R. Garfinkel & Stergios Skaperdas, 2000. "Conflict without Misperceptions or Incomplete Information," Journal of Conflict Resolution, Peace Science Society (International), vol. 44(6), pages 793-807, December.
    9. Powell, Robert, 2006. "War as a Commitment Problem," International Organization, Cambridge University Press, vol. 60(01), pages 169-203, January.
    10. Garfinkel, M.R. & Skaperdas, S., 2000. "Conflict without Misperceptions or Incomplete Information: how the Future Matters," Papers 99-00-11, California Irvine - School of Social Sciences.
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    12. Christopher Blattman & Edward Miguel, 2010. "Civil War," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 3-57, March.
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    16. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, Elsevier.
    17. Werner, Suzanne & Yuen, Amy, 2005. "Making and Keeping Peace," International Organization, Cambridge University Press, vol. 59(02), pages 261-292, April.
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    19. Avner Greif, 1997. "Self-enforcing Political System and Economic Growth: Late Medieval Genoa," Working Papers 97037, Stanford University, Department of Economics.
    20. Anna K. Jarstad & Desiree Nilsson, 2008. "From Words to Deeds: The Implementation of Power-Sharing Pacts in Peace Accords," Conflict Management and Peace Science, Peace Science Society (International), vol. 25(3), pages 206-223, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Stergios Skaperdas, 2011. "Proprietary Public Finance: On its Emergence and Evolution out of Anarchy," CESifo Working Paper Series 3495, CESifo Group Munich.
    2. repec:eee:exehis:v:64:y:2017:i:c:p:1-20 is not listed on IDEAS
    3. repec:eee:jeborg:v:149:y:2018:i:c:p:215-238 is not listed on IDEAS
    4. 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.
    5. Michelle R. Garfinkel & Michael McBride & Stergios Skaperdas, 2012. "Governance and Norms as Determinants of Arming," Revue d'économie politique, Dalloz, vol. 122(2), pages 197-212.
    6. Stergios Skaperdas, 2011. "The costs of organized violence: a review of the evidence," Economics of Governance, Springer, vol. 12(1), pages 1-23, March.
    7. Armey, Laura E. & McNab, Robert M., 2012. "Democratization and civil war," MPRA Paper 42460, University Library of Munich, Germany.
    8. McBride, Michael & Skaperdas, Stergios, 2014. "Conflict, settlement, and the shadow of the future," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 75-89.
    9. repec:eee:deveco:v:133:y:2018:i:c:p:434-447 is not listed on IDEAS
    10. Silve, Arthur & Verdier, Thierry, 2018. "A theory of regional conflict complexes," Journal of Development Economics, Elsevier, vol. 133(C), pages 434-447.
    11. Cingolani L, 2013. "The State of State Capacity : a review of concepts, evidence and measures," MERIT Working Papers 053, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    12. repec:spr:joecth:v:64:y:2017:i:3:d:10.1007_s00199-016-0990-3 is not listed on IDEAS
    13. Michelle R. Garfinkel & Stergios Skaperdas & Constantinos Syropoulos, 2010. "Trade in the Shadow of Power," Working Papers 101105, University of California-Irvine, Department of Economics, revised Jan 2011.
    14. Antonis Adam & Petros G. Sekeris, 2010. "Self-Containment: Achieving Peace in Anarchic Settings," Working Papers 1014, University of Namur, Department of Economics.

    More about this item

    Keywords

    Institutions; Conflict; Governance;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)

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