Bilateral War in a Multilateral World: Carrots and Sticks for Conflict Resolution

20 Pages Posted: 22 Oct 2007  

Zsolt Becsi

Southern Illinois University - Department of Economics

Sajal Lahiri

Southern Illinois University Carbondale - Department of Economics

Abstract

This paper constructs a three-country, specific-factor, trade-theoretic model in which two of the countries are in conflict and where war effort is determined endogenously in a Nash equilibrium. The third country does not take part in the war, but trades with the warring countries. In the framework, we examine, inter alia, how war and welfare are affected by globalization and by two instruments available to the third country - one carrot and one stick. Our overall conclusion is that the third parties do have the incentives for, and can play an effective role in, conflict resolution.

Suggested Citation

Becsi, Zsolt and Lahiri, Sajal, Bilateral War in a Multilateral World: Carrots and Sticks for Conflict Resolution. Canadian Journal of Economics, Vol. 40, No. 4, pp. 1168-1187, November 2007. Available at SSRN: https://ssrn.com/abstract=1023109 or http://dx.doi.org/10.1111/j.1365-2966.2007.00447.x

Zsolt Becsi (Contact Author)

Southern Illinois University - Department of Economics ( email )

MC 4515
Carbondale, IL 62901
United States

Sajal Lahiri

Southern Illinois University Carbondale - Department of Economics ( email )

MC 415
1000 Faner Drive
Carbondale, IL 62901
United States

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