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Continuing Conflict

  • John W. Maxwell

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

  • Rafael Reuveny

    (School of Public and Environmental Affairs, Indiana University)

A relatively small but growing literature in economics examines conflictive activities where agents allocate their resource endowments between wealth production and appropriation. To date, their studies have employed a one period, static game theoretic framework. We propose a methodology to extend this literature to a dynamic setting, modeling continuous conflict over renewable natural resources between two rival groups. Investigating the system’s steady states and dynamics, we find two results of general interest. First, Hirshleifer’s “paradox of power” is self-correcting. Second, if productive activities cause damage to disputed resources, the introduction of a small amount of conflictive activity enhances social welfare.

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File URL: http://kelley.iu.edu/riharbau/RePEc/iuk/wpaper/bepp2004-27-maxwell-reuveny.pdf
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Paper provided by Indiana University, Kelley School of Business, Department of Business Economics and Public Policy in its series Working Papers with number 2004-27.

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Date of creation: 2004
Date of revision:
Publication status: Published in Journal of Economic Behavior and Organization, 2005
Handle: RePEc:iuk:wpaper:2004-27
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  1. Rafael Reuveny & John W. Maxwell, . "Conflict and Renewable Resources," Working Papers 2004-26, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  2. Dan Usher, 1986. "The Dynastic Cycle and the Stationary State," Working Papers 671, Queen's University, Department of Economics.
  3. Grossman, Herschel I & Kim, Minseong, 1995. "Swords or Plowshares? A Theory of the Security of Claims to Property," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1275-88, December.
  4. Skaperdas, Stergios, 1992. "Cooperation, Conflict, and Power in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 82(4), pages 720-39, September.
  5. 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.
  6. Brander, James A & Taylor, M Scott, 1998. "The Simple Economics of Easter Island: A Ricardo-Malthus Model of Renewable Resource Use," American Economic Review, American Economic Association, vol. 88(1), pages 119-38, March.
  7. Reuveny, Rafael & Maxwell, John W., 1998. "Free trade and arms races: Some thoughts regarding EU-Russian trade," ZEI Working Papers B 14-1998, ZEI - Center for European Integration Studies, University of Bonn.
  8. Anderton, Charles H & Anderton, Roxane A & Carter, John R, 1999. "Economic Activity in the Shadow of Conflict," Economic Inquiry, Western Economic Association International, vol. 37(1), pages 166-79, January.
  9. Skaperdas, Stergios, 1996. "Contest Success Functions," Economic Theory, Springer, vol. 7(2), pages 283-90, February.
  10. Neary, Hugh M, 1997. "Equilibrium Structure in an Economic Model of Conflict," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 480-94, July.
  11. Jack Hirshleifer, 1991. "The Paradox Of Power," Economics and Politics, Wiley Blackwell, vol. 3(3), pages 177-200, November.
  12. Hirshleifer, Jack, 1995. "Anarchy and Its Breakdown," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 26-52, February.
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