When a resource like oil is domestically contested, trade patters and welfare can be very different than when property rights are costlessly enforced. Whereas (small-country) importers of the contested resource gain unambiguously relative to autarky, exporters of the contested resource lose...

We examine how globalization affects trade patterns and welfare when conflict prevails domestically. We do so in a simple model of trade, in which a natural resource like oil is contested by competing groups using real resources ('guns'). Thus, conflict is viewed as ultimately stemming from...

In this chapter, we review the recent literature on conflict and appropriation. Allowing for the possibility of conflict, which amounts to recognizing the possibility that property rights are not perfectly and costlessly enforced, represents a significant departure from the traditional paradigm...

We explore the severity of an ongoing dispute over a productive resource within a country that participates in world trade. In addition to arming, the contending groups in our setting choose either to engage in destructive conflict or to settle their dispute peacefully. Our central objective is...

We construct a model of conflict and trade to study the consequences of interstate disputes over contested resources (land, oil, water or other resources) for arming, welfare and trade flows. Different trade regimes imply different costs of such disputes in terms of arming. Depending on world...

Conflict and war are typically viewed as the outcome of misperceptions, incomplete information, or even irrationality. The authors show that it can be otherwise. Despite the short-run incentives to settle disputes peacefully, there can be long-term, compounding rewards to going to war when doing...