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Geopolitics and International Trade Infrastructure

Author

Listed:
  • Sebastian Galiani
  • José Manuel Paz y Miño
  • Gustavo Torrens

Abstract

We develop a simple (incumbent versus entrant) strategic deterrence model to study the economic and geopolitical interactions underlying international trade-related infrastructure projects such as the Panama Canal. We study the incentives for global geopolitical players to support allied satellite countries where these projects are or could potentially be built. We show that even if no effective competitor emerges, the appearance of a geopolitical challenger capable of credibly supporting the entrant has a pro-competition economic effect which benefits consumers all over the world.

Suggested Citation

  • Sebastian Galiani & José Manuel Paz y Miño & Gustavo Torrens, 2021. "Geopolitics and International Trade Infrastructure," NBER Working Papers 29026, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29026
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    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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