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Third-Party Interest, Resource Value, and the Likelihood of Conflict




Resource wealth induces predation incentives but also conflict-deterring third-party involvement. As a result, the relation between resource value and conflict probability is a priori unclear. This paper studies such relation with a flexible theoretical framework involving a resource holder, a predator, and a powerful third party. First, we show that, if third-party incentives to intervene are sufficiently strong, conflict probability is hump-shaped in the resource value. Second, we theoretically establish that resource value increases the third party's incentive to side with the resource-rich defendant in case of intervention, providing another mechanism for stabilization when the resource value is high. Third, exploiting widely-used measures of resource value and geologic predictors of oil presence, we provide evidence for our theoretical results. Using data on military bases and arms' trade, we show suggestive evidence that US military inuence drives a non-monotonicity of conflict probability in oil value.

Suggested Citation

  • Giacomo Battiston & Matteo Bizzarri & Riccardo Franceschin, 2021. "Third-Party Interest, Resource Value, and the Likelihood of Conflict," CSEF Working Papers 631, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 20 Jun 2022.
  • Handle: RePEc:sef:csefwp:631

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    conflict; resource curse; third party; oil; intervention.;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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