Networks of Military Alliances, Wars, and International Trade

44 Pages Posted: 28 May 2014 Last revised: 31 Aug 2015

See all articles by Matthew O. Jackson

Matthew O. Jackson

Stanford University - Department of Economics; Santa Fe Institute; Canadian Institute for Advanced Research (CIFAR)

Stephen Nei

Stanford University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 1, 2015

Abstract

We investigate the role of networks of alliances in preventing (multilateral) interstate wars. We first show that, in the absence of international trade, no network of alliances is peaceful and stable. We then show that international trade induces peaceful and stable networks: trade increases the density of alliances so that countries are less vulnerable to attack and also reduces countries' incentives to attack an ally. We present historical data on wars and trade, noting that the dramatic drop in interstate wars since 1950, and accompanying densification and stabilization of alliances, are consistent with the model. Based on the model we also examine some specific relationships, finding that countries that have high levels of trade with their allies are less likely to be involved in wars with any other countries (including allies and non-allies), and that increased trade between two countries decreases the chance that they end up in a war.

Keywords: Alliances, Conflict, War, Networks, International Trade, Treaties

JEL Classification: D74, D85, F10

Suggested Citation

Jackson, Matthew O. and Nei, Stephen, Networks of Military Alliances, Wars, and International Trade (July 1, 2015). FEEM Working Paper No. 46.2014. Available at SSRN: https://ssrn.com/abstract=2441869 or http://dx.doi.org/10.2139/ssrn.2441869

Matthew O. Jackson (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
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1-650-723-3544 (Phone)

HOME PAGE: http://www.stanford.edu/~jacksonm

Santa Fe Institute

1399 Hyde Park Road
Santa Fe, NM 87501
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Canadian Institute for Advanced Research (CIFAR) ( email )

180 Dundas Street West, Suite 1400
Toronto, Ontario
Canada

Stephen Nei

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

HOME PAGE: http://www.stanford.edu/~snei

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