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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

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    Keywords

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    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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